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45L Tax Credit

02/03/2012

About the §45L Tax Credit
The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 extended the Energy Efficient Home Credit which offers a 45L tax credit of $2,000 per dwelling unit to developers of 45L energy efficient residential buildings completed after August 8, 2005.

Eligible Apartment Buildings, Condos, & Single Family Home Developments For 45L
A dwelling unit should provide a level of heating and cooling energy consumption that is significantly less than certain 2004 energy standards. Based on current construction trends and local building codes, many developments already exceed these standards for 45L.

45L Benefits
30 qualified 45L units = $60,000 in tax credits
60 qualified 45L units = $120,000 in tax credits
100 qualified 45L units = $200,000 in tax credits
200 qualified 45L units = $400,000 in tax credits
500 qualified 45L units = $1,000,000 in tax credits
1000 qualified 45L units = $2,000,000 in tax credits

Ideal Candidates for 45L
All apartment buildings, residential condominiums, and single family home developments completed on or after August 8, 2005 with 10 or more units are worth assessing for 45L energy tax credits. Eligible construction also includes substantial reconstruction and rehabilitation. Additionally, IRC 45L allows for a $1,000 or $2,000 tax credit for manufactured homes that meet the criteria.

45L Tax Credit

03/04/2011

What is the 45L Tax Credit?

The 45L Tax Credit is a Federal Tax Credit worth $2,000 per dwelling unit that rewards multifamily developers, investors, and homebuilders that develop energy efficient homes and units that are sold or leased after December 31, 2005.

Starting in 2023, the Inflation Reduction Act increases the tax credit amount to as much as $5,000 per dwelling unit for both single-family and multifamily developments. Additionally, the energy efficiency criteria changes to align with Department of Energy programs for Energy Star and Zero Energy Ready Homes. As a result, all residential developments become eligible whereas prior, only low-rise residential developments were eligible.

Eligible Apartment Buildings, Condos, & Single Family Home Developments

A dwelling unit should provide a level of heating and cooling energy consumption that is significantly less than certain energy standards. Based on current construction trends and local building codes, many developments are adopting energy efficient measures that help towards qualification of the 45L tax credits.

Impact of the Inflation Reduction Act on 45L Tax Credits

2022 & EARLIER 2023 TO 2032*
50% Savings over 2006 IECC Energy Star Energy Star Plus Prevailing Wages Zero Energy Ready Zero Energy Ready Plus Prevailing Wages
MULTIFAMILY DEVELOPER $2,000 $500 $2,500 $1,000 $5,000
HOMEBUILDER
Single Family For Sale or Build to Rent		 $2,000 $2,500 $2,500 $5,000 $5,000

*Starting in 2023, mid-rise and high-rise projects are eligible for 45L; 3 stories or less above grade is no longer a requirement.

Who is an Ideal Candidate for the 45L Tax Credits?

All apartment buildings, residential condominiums, and single family home developments with 20 or more units can be assessed for energy tax credits. Eligible construction also includes substantial reconstruction and rehabilitation.

What is the Process of the 45L Tax Credits?

The basis for developing and supporting this tax credit is a detailed energy analysis that must be certified by a qualified third-party. Our multi-disciplinary team of engineers and tax experts will ensure that you obtain the maximum tax credits and provide all the documentation necessary to sustain an IRS audit.

“Every residential developer
should consider 45L tax
credits as part of their
tax reduction strategy“

What are the Benefits of the 45L Tax Credit?

The Energy Efficient Home Credit offers a tax credit of $2,000 per dwelling unit to developers of energy efficient buildings completed after August 8, 2005. Below is a sample of expected benefits based on the number of qualified dwelling units.

$100,000 in 45L Tax Credits

50 qualified units

$200,000 in 45L Tax Credits

100 qualified units

$2,000,000 in 45L Tax Credits

1,000 qualified units

45L Tax Insights

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