The legacy 45L Energy Efficient Home Credit expires soon, but there is still time to take advantage of this federal tax credit that offers $2,000 per qualifying dwelling unit.
Why Act Now?
The most target-rich market for this credit is multifamily developers who placed units into service in 2021 and 2022. If the taxpayer extended their 2021 tax return, those credits are still available. This is a significant opportunity to maximize tax savings before the credit expires. Single-family units can work, too, but the developer needs to be able to have basis in the property during construction, and we may need inspection access.
Key Information Needed
- Placed into Service Date: Properties from 2021 and 2022 are eligible. This can include rent rolls.
- Address of the Property
- Example Plans and Energy Technical Specifications: These can be provided later if not immediately available. Complete drawing set for each unique floorplan, including energy information (HERS, Energy Star, LEED, manual J’s, etc.)
Potential Savings: For a developer building and selling 1,000 units per year, the potential federal tax credits are substantial:
- 2021: 1,000 units = $2,000,000 in federal tax credits
- 2022: 1,000 units = $2,000,000 in federal tax credits
- Total: $4,000,000 in federal 45L tax credits
Future Opportunities: For years 2023 and later, developers could qualify for $500 to $5,000 per unit, depending on certification and prevailing wages paid:
- $5,000 per unit: ZERO ENERGY READY CERTIFIED + Prevailing wages paid
- $2,500 per unit: ENERGY STAR CERTIFIED + Prevailing wages paid
- $500 per unit: ENERGY STAR CERTIFIED, but not meeting prevailing wages