What is the 45L Tax Credit?
The 45L Tax Credit is a home federal tax credit offered to builders and developers for meeting energy-efficiency building standards. The tax credit is claimed when filing their taxes.
How much is the 45L Tax Credit worth?
- 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
In 2022 alone, we’ve been able to help single-family builders recoup $6.64 million in tax credits following the last 45L Tax Credit extension!
Looking for information on multifamily 45L Tax Credits?
Head over to this page for the full scoop!
What single-family homes qualify for the 45L energy-efficient tax credit?
All closed homes during the period from January 1st, 2020 – December, 31st 2021 are retroactively eligible for review. All homes closed in the 2022 calendar year will also be eligible under this current extension.
To qualify, the homes must receive a HERS Rating at minimum for us 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.
Starting next year, homes that qualify for ENERGY STAR and/or the DOE Zero Energy Ready Program qualify for the tax credit. As a reminder, builders need to transition to ENERGY STAR v3.1 as soon as possible to qualify for tax credits next year.
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.
How does the 45L Tax Credit Work?
Builders provide us with a list of closings and we use software (approved by the Department of Energy) to assess compliance and then hand out certificates for qualifying homes. From there, your tax professional uses Form 8908 to claim credits ($2000 per home for 2022 closings).
Note: For 2023 and beyond, we’ll 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.
Frequently Asked Questions
- Who can benefit from the 45L Tax Credit?
- This Tax Credit is intended for single-family builders and multifamily developers (not homeowners).
- Multifamily developers can learn more here →
- Will the 45L Tax Credit be extended again?
- It’s already been extended for homes acquired through 2032, which is the longest extension ever!
- Is the 45L Tax Credit new?
- No, the 45L tax credit has been around for a while. In 2019, the US House and Senate voted to approve a tax extender bill that included an extension for the 45L Energy Efficient Homes Tax credit (section 129: Energy Efficient Homes Credit). This tax credit previously expired on December, 31st 2017.
- The extender bill contained a retroactive extension of the 45L Tax Credit beginning on January, 1st 2018 through December 31st, 2020. All homes closed during that period became eligible for the $2,000/home federal tax credit.
Seem complicated? That’s where we come in!
Southern Energy Management can systematically analyze your plans and work with you to develop strategies to ensure 45L compliance.
Interested to see if your homes can qualify?
Contact Us Today →
