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The 45L Home Tax Credit

Tax Rewards for Multi-Family Developers, Investors, and Homebuilders of Energy Efficient Homes and Units

Overview

A Federal Tax Credit Worth up to $5,000 Per Qualifying Unit

The 45L Federal tax credit is designed to encourage the construction of energy-efficient dwellings, and has been available to eligible contractors since 2006. This credited was recently expanded and extended through 2032.

Section 45L provides an income tax credit to home builders and multifamily residential developers to encourage them to invest in building energy-efficient properties.

Eligible Properties:

  • Affordable housing (LIHTC)
  • Apartment properties
  • Single family homes
  • Assisted living housing
  • Student housing

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How ?

Qualification Requirements

Each unit should provide a higher level of energy efficiency than national energy standards.

Net Benefit

Efficiency Standards and Certification Requirements

RequirementSingle Family HomesMulti-Family HomesQualification RequirementsUnits may be certified under either the Energy Star New Homes and Multifamily programs and for an increased credit amount the DOE-Zero Energy Ready Homes Program (ZERH).Units may be certified under either the Energy Star new Homes and multifamily programs and for an increased credit amount the DOE- Zero Energy Ready Homes Program (ZERH)Height RequirementsNo limitation of stories for the energy star program. Limited to 5 Stories or Less for ZERHNo limitation of stories for the Energy Star program. Limited to 5 stories or less for ZERH.Tax Credit Amount if Project Meets Prevailing Wage**$2500 for Energy Star $5000 for ZERH$2500 for Energy Star $5000 for ZERHTax Credit Amount if Project Does Not Meet Prevailing Wage**$2500 for Energy Star $5000 for ZERH$500 for Energy Star $1000 for ZERHTax Year EligibilityEligible for new homes initially sold or leased after 12/31/2022 It is necessary that a pre drywall inspection be performed so it is important to start the process as early as possible even as soon as the pre construction/design phase.Eligible for new homes initially sold or leased after 12/31/2022 It is necessary that a pre drywall inspection be performed so it is important to start the process as early as possible even as soon as the pre construction/design phase.

**Prevailing wage is not a requirement for Single Family Homes.

Tax Credit Requirements

  • Certification must be completed by a licensed, unrelated third-party professional. Our 45L certifications are evaluated, modeled and validated by our engineers.
  • When certification is complete, you receive a package with all necessary documentation to sustain the tax credit in case of IRS audit.

Get Started

The process starts with a no-cost review of your construction projects (in process or completed). With a good set of construction plans and project specifications, we determine which units can qualify for these credits. We discuss with you the necessary next steps to complete certification and documentation as required by the IRS under 45L.

This process generally takes 30-60 days to complete.

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Step 1:

Initial Consultation - Identifying Opportunities

  • Our process starts with a consultation to determine if your project is a candidate for the Energy Star or Zero Energy Ready Home (ZERH) program.
  • We assess prevailing wage requirements, and identify any technical construction prerequisites that might affect your project’s eligibility.
  • We integrate additional green building opportunities with the tax credit program, maximizing your benefits.
  • Early Engagement is essential to optimize project outcomes.

Step Step 2:

Technical Feasibility Review

If you express interest after the initial consultation, we proceed to an in-depth technical feasibility review. During this phase, we evaluate whether your project meets the Energy Star or ZERH program requirements or determine what adjustments are necessary to qualify. Our goal is to ensure your project aligns with the program’s goals and standards.
 

Step 3:

Energy Modeling and Training

Upon engagement, our engineering professionals take charge. We conduct comprehensive energy modeling as mandated by the program’s standards. Additionally, we provide essential training to your developer and builder team on crucial milestones required to attain the desired certifications. If design changes are needed to meet the criteria, we’ll make recommendations at this stage.
 
 

Step 4:

Preconstruction Support

Throughout the construction phase, our pre construction team remains at your disposal. We assist in addressing queries, track project progress, and provide the necessary checklists for your builder/developer team to complete. Our goal is to ensure your project stays on track and compliant with program requirements.

Step 5:

Pre-Drywall Inspections - A Critical Step

This phase is pivotal. We conduct mandatory pre-drywall inspections to verify that the project aligns with the Energy Star or ZERH standards. This step is critical and cannot be missed, as it ensures compliance with program requirements before the project advances further.
 

Step 6:

Ongoing Support and Additional Certifications

We assist with any additional green building certifications you may seek, simultaneously completing models and documentation required for these certifications. Our commitment is to help you achieve the highest levels of sustainability and energy efficiency.

Step 7:

Final Site Inspections and Deliverables

Before the project concludes, our team performs final site inspections to validate compliance with all program criteria. We then compile and deliver the final project documentation and deliverables.
 

Step 8:

Submittals to Governing Authorities

We take care of submitting all required documentation to the relevant governing authorities for their review and certification. Our experience ensures a smooth and efficient process.

Step 9:

Tax Credit Claiming

Finally, we provide your tax team with all necessary documentation and support for the successful claiming of the tax credits. We ensure that you receive the financial benefits you’re entitled to under the 45L Tax Credit program.

At Meridian, we are committed to guiding your project through every step of the process, from initial assessment to certification and tax credit claiming. Our expertise and dedication will help you navigate the intricacies of the program and maximize your project’s success. Contact us today to get started on your path to energy-efficient and sustainable building solutions.

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