Section 45L Tax Credit
What Is This Credit?
Property owners who improve their properties and have reduce the heating and cooling 'loads' by 50% over the 2006
International Energy Conservation Code (IECC) following an energy audit and on-site inspection, they are eligible
for a $2,000 per unit tax credit. Even if you have already attempted to get this credit and failed to qualify,
you may still qualify. Here's how.
Many people mistakenly believe in order to qualify for the tax credit they need to improve their HVAC systems to be
50% better than the minimum required be installed in the 2006 IECC standard. This is not true. We are talking about
heating and cooling 'loads', not heating and cooling 'systems'.
We know that reducing airflow and improving insulation can substantially reduce heating and cooling loads. An
example would be weatherstripping the front door could be enough to reduce the airflow such that the heating and
cooling loads improve by 50% over those of the 2006 IECC reference unit. Now this is a simplistic example, but
not out of the realm of possibilities.
To qualify for the tax credit
To qualify for the tax credits the property must be meet the following:
- the property was built between August 5, 2005 and December 31, 2018
- constructed or renovated in the United States, includes territories considered the United States
- improved the heating & cooling loads by 50% as compared to a reference unit built to the 2006
International Energy Conservation Code (IECC) standard¹.
- Requires the dwelling unit be modeled to determine if the unit reduces the energy use
- Requires an on-site visual inspection
Who Can Benefit?
The 45L tax credit benefits investors in single family and low-rise multifamily residential properties. It
delivers some significant cost savings. Coupled with our Dispositive Analysis it can effectively reduce your
overall cost of renovations. The Federal Energy Efficient New Homes Tax Credit (Section 45L) applies to
single family and low-rise multifamily properties that were sold or leased between August 2005 and December 31, 2017.
Claiming the 45L Tax Credit
If you have made any improvements to your property between
2016 and 2019
and have not yet filed your 2019 return, there is a good chance
you qualify for this tax credit.
An energy model is created to determine the heating and cooling loads.
If they satisfy the requirements to take the credit then an on-site inspection is scheduled.
We will review your property, at no cost to you, to see if there's any
options available to qualify for the tax credit. If your property meets the following criteria you owe it
to yourself to see if you qualify.
NOTE: The tax code does not require any testing be completed during the on-site inspection. However,
there are several locations in the energy model where estimates have to be entered. Using these estimates, one can
qualify a property when it doesn't really qualify. And since the statute does not require any testing while on-site,
an IRS examiner could call these credits into question.
Our consultants will actually conduct the testing necessary to confirm these estimates and create photo-documentation
to back up the validity of the tax credits. An important distinction.
If you would like to know if your property qualifies, upload your full set of construction or renovation plans, your
cut sheets if you have them, and we will evaluate your plans and make a determination if your property qualifies for
the $2,000 per dwelling unit tax cut. We will do this at no charge to you. Give it a try, you have nothing to lose.