How much is the 45L Tax Credit worth for multifamily projects?
What is the process for claiming 45L for multifamily projects?
The 45L tax credit is a home federal tax credit available to new construction multifamily and single-family projects that meet energy-efficiency building standards. It has been updated and extended through 2032.
|Program Requirements||Tax Credit Value|
|ENERGY STAR MFNC *||$500/unit|
|ENERGY STAR MFNC + DOE Zero Energy Ready **||$1,000/unit|
|ENERGY STAR MFNC + Prevailing Wage ***||$2,500/unit|
|ENERGY STAR MFNC + DOE Zero Energy Ready + Prevailing Wage||$5,000/unit|
* ENERGY STAR Multifamily New Construction
** DOE Zero Energy Ready: Department of Energy’s Zero Energy Ready Homes certification program
Do all units in a project have to qualify? Is it all or nothing?
Yes, ENERGY STAR needs all units to meet the requirements in order to achieve certification.
Who can benefit from 45L credits?
This Tax Credit is intended for multifamily and single-family builders and developers (not homeowners or tenants).
What types of buildings qualify?
Any residential buildings (single-family, multifamily, or manufactured homes) that meet the ENERGY STAR definition of a dwelling unit will qualify.
In this case, a dwelling unit is defined as a single unit providing complete independent living facilities for one or more persons, including permanent provisions for living, sleeping, eating, cooking, and sanitation.
Can multifamily projects be retroactively eligible for 45L Tax Credits?
Potentially. ENERGY STAR can only be achieved on new construction or major renovations. If the project is undergoing renovation, reach out to us and we can help determine if it is being renovated enough to be eligible for certification.
When do new multifamily projects need to get started on ENERGY STAR or DOE Zero Energy Ready certification in the development process?
As soon as possible! We always like to say the earlier the better so we can get the requirements designed in, but ideally no later than CD’s
If you’re interested in qualifying for the 45L Tax Credit by pursuing ENERGY STAR or the DOE Zero Energy Ready Program, or are interested in more information about incentives for energy efficiency in general, please reach out to us today!
What is the 45L Tax Credit and How Builders Can Get Up To $5000 per home built.
**Secure Home Inspections HERS Energy Rater Division Launches in 2023**
What is the 45L Tax Credit?
Otherwise known as “The energy efficient home credit “, which provides eligible contractors up to a $5,000 tax credit for each energy efficient dwelling unit, is retroactively available for projects placed in service from 2020 to 2022, and through the end of 2032.
When did the 45L Tax Credit Start?
The Section 45L tax credit has existed since 2006 and most recently expired at the end of 2021.
Congress has passed, and President Biden has signed into law the Inflation Reduction Act. This important legislative action includes provisions regarding the 45L tax credit.
Who is the 45L Tax Credit For?
This Tax Credit is intended for single-family builders and multifamily developers (not homeowners).
When Did the Tax Credit Originally Expire?
December 31, 2021
Why Did the Tax Credit Get Extended and How Long?
It has now been extended until December 31, 2032.
You can read the entire 725 page Inflation Reduction Act. or just jump to page 367 where it talks about the changes to the 45L tax credit [Section 13340]..
The Inflation Reduction Act (IRA) was recently signed to be extended on August 16th. This means several exciting things for the clean energy world including:
- Increasing the Solar Tax Credit (ITC) to 30%
- Extending the existing 45L Tax Credit for energy-efficient single-family and multifamily homes for the next 10 years!
- Increasing the tax credit to $2,500 per home if it meets the eligibility standards of the EPA’s Energy STAR Single Family New Homes Program.
- $5000 tax credit to homes that are certified to meet the DOE’s Zero Energy Ready Home program. Zero Energy Ready Homes Requirements
How much money can you get with the tax credit?
- For homes acquired (closed or leased) from 1/1/2021 to 12/31/2022: $2,000
- For homes acquired (closed or leased) from 1/1/2023 to 12/31/2024:
- Homes that qualify for ENERGY STAR v3.1: $2,500
- Homes that qualify for DOE Zero Energy Ready: $5,000
- For homes acquired (closed or leased) from 1/1/2025 to 12/31/2032:
- Homes that qualify for ENERGY STAR v3.2: $2,500
- Homes that qualify for DOE Zero Energy Ready: $5,000
What Single Family Homes Qualify For The Tax Credit?
To qualify, the homes must receive a HERS Rating at minimum to demonstrate that the heating and cooling energy loads are 50% more efficient than a comparable house built to the 2006 IECC AND that building envelope improvements account for at least ⅕ of the 50% energy savings.
For example – if a builder starts a house today and it closes on January 2, 2023, it will need to be ENERGY STAR v3.1 Certified to get the tax credit.
What Are The Steps and How Does The 45L Tax Credit Work?
Starting in 2023 and beyond, Secure Home Inspections will run a free ENERGY STAR and/or DOE Zero Energy Ready Program analysis to help you understand how to qualify for the new tax credit.
Are You 45L Compliant?
If it all seems overwhelming, don’t worry that is what we are here for. To find out if the homes you are building qualify CLICK HERE.
Looking for information on multifamily 45L Tax Credits? CLICK HERE
The map of where versions of ENERGY STAR are in effect is posted below: