The 45L Tax Credit is available to single-family and multi-family builders as well as manufactured home producers for exceeding certain energy standards.
For years before 2023, the credit is $2,000 per dwelling unit to be claimed in the tax year each unit is first sold or leased. The credit can be claimed for newly constructed and substantially renovated homes and apartments as well as manufactured homes. We can certify units up to three years before the filing date for each year by amending tax returns. (Some exceptions apply, and certain parameters must be met).
For 2023, the credit and the requirements for it have changed. The Inflation Reduction Act of 2022 extended the credit through 2032.
◾ $2,500 with Energy Star becoming the new base qualification standard
◾ $5,000 with Zero Energy Ready Home qualification
◾ $500 per unit with Energy Star base qualification, potentially up to $2,500 if the taxpayer meets the additional prevailing wage requirement
◾ $1,000 per unit with Zero Energy Ready qualification, potentially up to $5,000 with the prevailing wage requirement
» Low Income Housing Tax Credit (LIHTC) properties no longer must reduce their adjusted basis under Section 42. This has been a major issue for LIHTC developers, requiring excess basis in the property to take advantage of 45L. LIHTC properties become a huge 45L opportunity area starting in 2023.
Claiming the credit for years before 2023 as well as 2023 and beyond requires energy modeling, inspections, and certification from an eligible certifier (which BRAYN has on staff).
The 2022 Inflation Reduction Act (IRA) that was signed into law, provides new tax credit opportunities for residential builders and developers. The IRA extended the 45L Tax Credit through 2032 and expanded it to as much as $5,000 per home or unit for exceeding certain energy efficiency standards.
|Homes Sold or Leased||45L Tax Credit||Qualification|
|All Open Tax Years through 2022||$2,000/home||50% better than 2006 IECC Buildings 3 Stories or Lower|
|2023 - 2032||$2,500/home *||Energy Star Certification|
|2023 - 2032||$5,000/home *||Zero Energy Ready Home Certification|
* Multifamily developments must meet prevailing wage requirements starting in 2023, or credit is reduced to $500/$1,000 per unit.
BRAYN’s team of engineers, raters, building scientists, & tax professionals can advise on the changing requirements and certify your homes & developments for energy code compliance & 45L Tax Credits.
IRS Circular 230 Disclosure - To ensure compliance with requirements imposed by the IRS, we inform you that any U.S. tax advise contained in this communication is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding tax related penalties under the Internal Revenue Code, or (ii) promoting, marketing, or recommending to another party any transaction or matter addressed herein.