§45L Energy-Efficient Home Credit
Section 45L is a little-known tax credit that offers developers a means to offset the costs associated with building energy-efficient single family or multifamily properties. The credit provides a dollar-for-dollar offset against taxes owed or paid in the tax year in which the property is sold or leased. The credit can be taken on amended returns or carried forward up to 20 years. The IRS requires that a §45L analysis be conducted by a certified third-party using IRS-approved modeling software. An analysis compares the combined energy efficiency improvement of a unit’s envelope and HVAC systems for properties constructed from 2012-2014. The unit’s efficiency is compared against a 2006 reference property per International Energy Conservation Code (IECC) guidelines. Properties that are at least 50 percent more efficient than the reference property will qualify for the credit.
The SourceHOV Tax approach to §45L includes:
Phase I – a complimentary review of the property which includes detailed engineering takeoffs and modeling with IRS approved software.
Phase II – a field test to confirm that the property qualifies per IRS and IECC guidelines.
Tax forms and certifications – all required forms and certifications to be filed with the tax return.
Fees – based on the number of units that actually qualify for the credit.
Our §45L team includes tax and engineering professionals who are certified to perform §45L analyses and use IRS-approved software. Our team also includes former Big Four CPAs, a certified energy rater, and a former IRS tax attorney with in-depth experience in sampling protocol. The §45L tax credit can provide significant tax savings for developers with large-scale projects, and we’ve designed our approach so that exploring the credit is virtually risk free.