45L Energy Efficient Home Credit
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 prior to 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 are able to certify units up to three years prior to 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. Beginning January 1, 2023 the new structure and requirements are as follows:
- For qualified single family and manufactured homes first acquired for use as a residence in 2023, the credit jumps to:
- $2,500 with Energy Star becoming the new base qualification standard
- $5,000 with Zero Energy Ready Home qualification
- For qualified multifamily units first acquired for use as a residence in 2023, the credit is:
- $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 prior to 2023 as well as 2023 and beyond requires energy modeling, inspections, and certification from an eligible certifier (which Brayn has on staff).