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Tax Credits for Builders of Energy Efficient Homes

The New Energy Efficient Home Tax Credit, Code Section 45L, has been extended to December 31, 2020.

This Tax Credit has been available every year since 2005, don’t let this valuable credit go unclaimed!

The legislation has been retroactively reinstated for 2018 and 2019, and extended through 2020.

Energy efficient residential dwellings, built by eligible contractors, purchased or leased from the contractor and used as a residence may qualify for the Section 45L Tax Credit of $2,000 for each home.

  • You don’t need Cost Segregation Experts or Engineering Tax Consultants to obtain the 45L Tax Credit
  • You do need a qualified certifier. Building Knowledge is authorized to use the RESENT approved energy performance measurement methods to certify homes that meet the requirements of the 45L Tax Credit.

Qualifying New Energy Efficient Home

A qualified new energy efficient home must be:

  • A dwelling unit located in the United States
  • Substantially completed after August 8, 2005, and sold or leased to another person before 2021
  • Certified to meet the energy saving requirements

Eligible Contractor

  • Eligible contractors are those that constructed the qualified energy efficient home and also own and have a tax basis in the home during its construction (i.e., they must own and then sell/lease the residence)
  • Additionally, eligible contractors may hire a third party contractor to construct the home and qualify for the tax credit

Energy Savings Requirements

  • The $2,000 credit is available for a dwelling unit that is certified to have an annual level of heating and cooling energy consumption at least 50% below the annual level of heating and cooling energy consumption of a comparable dwelling unit built to the standards for the 2006 International Energy Conservation Code
  • In addition the building envelope component improvements (i.e. insulation, windows, etc.) must account for at least 20% of the reduction in energy consumption

Dwelling units

  • A dwelling unit is a single unit providing complete independent living facilities for one or more persons, including permanent provisions for living, sleeping, eating, cooking, and sanitation, within a building that is not more than three stories above grade in height
  • This means Single Family Homes, Two-Family Dwellings, Townhouses and Multi-Family Units, up to three stories may qualify

Certification

  • A preliminary energy rating is done to see if the dwelling unit(s) as designed will qualify
  • A pre-drywall inspection to verify the quality of insulation that was installed
  • A final inspection which includes a blower door test, duct leakage test & verification of the building energy efficiency features.
  • The final energy rating is completed and you are provided with the certification

Resources

IRS Form 8908 Energy Efficient Home Tax Credit

Instructions for Form 8908

For More Information

Contact us today to see how your homes can qualify! Click here.

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