45L Tax Credit for Energy Efficient Home
Section 45L or Energy Efficient Residential Tax Credit has been recently extended through the end of 2021.
The tax credit is $2000 per residential dwelling unit.
The Tax Increase Prevention Act of 2014 allows the incentive to be claimed retroactively for all residential developments built within the last three years and any unused credit can be carried forward for up to 20 years. There is no maximum number of units when claiming for the credit as long as your property meets the qualified energy-efficiency standards.
Who Can Claim the 45L Tax Incentives?
The Eligible Contractor
Eligible Property or Building Types
- Single and Multi-family Dwellings (3 stories or less)
- Apartment Building
- Residential Condominiums
- Student Housing
- Assisted Living Facilities
- Affordable Housing
- Production Home Developments
Qualified Energy-Efficient Features
- HVAC units with SEER 13+
- Gas furnaces (80%+ efficiency)
- R-13 – 19 wall insulation
- Extra insulated foundations/slabs
- R-38+ roof insulation
- Vinyl windows and rated low E
- Double or triple-pane window glass
The Filing Process
Processing 45L Certificate
Here at Specialty Tax Advisors, we perform a thorough and detailed process in evaluating your residential project to provide a quality 45L study, certification, and related documents to assist in claiming a 45L tax credit. Our tax expertise and experience can help you apply and qualify for this advantageous tax incentive.
We provide a complimentary pre-qualification study to determine if your building units pass the energy requirements. This pre-qualification study also figures the right amount of tax credits you can claim, and the certification cost.
In performing a pre-qualification study, the following details are needed in order for us to gauge the project and provide more assistance.
- Name and location of the building units
- Owner’s legal name
- Service year of the building
- Building Plans that consists of the following:
An architectural plan including specifications, calculations, and other details
A mechanical plan including HVAC components
An electrical plan including circuit designs and electrical systems of the building
- Windows Specifications including U-value and SHGC. U-value is the thermal transmittance through the window while SHGC (Solar Heat Gain Coefficient) is the amount of solar radiation passing through the window. The lower U-value has, the better the insulation properties, and the higher the SHGC value has, the more it provides free solar heating for the home.
- Mechanical Ventilation including the type, model numbers, and duration of hours used per day. These systems allow air to flow in the building and seeks to improve air quality.
- The following additional information may be needed if not stated on the building plans: Heating Specifications including AFUE (Annual Fuel Utilization Efficiency), BTUh (British Thermal Unit per Hour), manufacturer, and model numbers. Cooling Specifications including SEER/EER (Seasonal Energy Efficiency Ratio/Energy Efficiency Ratio), BTUh, manufacturer, and model numbers. Water Heater Specifications including manufacturer and model numbers.
To proceed with the certification, an Engagement Letter that specifies the scope of the agreement, fees, and terms, is to be approved by the developer. Certification will start as soon as the signed agreement and the downpayment of a 25% certification fee have been made. The down payment is to be used on the certification cost or returns if no units passed the energy efficiency requirements.
Green Building Certification
Building certification is obtained when the following are completed:
- Energy Efficiency upgrades or remodeling
- On-site visit for investigating the composition of the building and ensuring no air leakages
- Computer modeling for analyzing the energy systems of the building
45L Certification Details
Details about the building and the developer are to be specified on the certification document. The following details include:
- Building units address
- The legal name of the developer
- The legal name of the developer
- Phone number of the developer
Issuing of Certification Package
The certification package consists of the following:
- Tax certification documents
- Summary letter
- Energy Efficiency overview of the every-single unit of the building
- Recommendations for units that did not meet the energy requirements
Claiming the Tax Credit
After the detailed energy study has been certified and documented, IRS Form 8908 is to be filed by the developer during the service year to claim the tax credit. To learn more about how to process your 45L tax credit, call Mark Barbour at (310) 383-1302 or contact via email at [email protected].
How We Can Help
Our team of tax and energy modeling experts guarantees that you get the maximum credits. We are unique in that we will not only prequalify the dwelling units for energy efficiency but also help the taxpayer and their accounting team determine the utilization of the credit. We help navigate the taxpayer through the filing requirements and build a file complete with the documentation needed for sustaining an IRS audit. Our multidisciplinary team of engineers conducts on-site testing and computer modeling by using IRS approved software programs.