Energy-Efficient New Homes Tax Credit for Home Builders (IRC Section 45L)

Program Name: Energy-Efficient New Homes Tax Credit for Home Builders (IRC Section 45L)
Program Sponsor: IRS (Federal)
Program Type:          Tax Credit
Technology:               Energy Efficiency Comprehensive Measures/Whole Building
Eligibility:  Builders/Developers
Deadline:  December 31, 2021

Description

The Energy-Efficient New Homes Tax Credit for Home Builders (IRC Section 45L) allows developers or builders of a qualified new energy-efficiency home to claim a $2,000 tax credit in the year that unit is sold or leased as a residence.

Eligibility

Homebuilders of single-family homes or developers of low-rise multifamily developments may qualify as an eligible contractor for the 45L credit. For a developer of a low-rise multifamily development, the credit applies to each qualifying unit initially leased or sold during the year.

In addition to the energy efficiency requirements detailed below, the dwelling must be located in the U.S., be substantially constructed after December 31,2005, and be initially leased or sold for use as a residence during the year the credit it claimed.

How the Program Works

To qualify, properties must achieve a 50 percent energy savings for heating and cooling over the 2006 International Energy Conservation Code (IECC) and supplements. For a developer of a low-rise multifamily development, the credit applies to each qualifying unit initially leased or sold during the year.

There is also a $1,000 tax credit to the producer of a new manufactured home conforming to Federal Manufactured Home Construction and Safety Standards and achieving 30% energy savings for heating and cooling over the 2006 IECC and supplements (at least 1/3 of the savings had to come from building envelope improvements).

The eligible contractor must obtain a certification for a qualified third-party certifier in order to claim the credit. Multifamily developers wishing to claim the credit must independently certify that each unit meets the required energy savings.

IRS Notice 2006-27 provides guidance for the credit for building energy-efficient homes other than manufactured homes. IRS Notice 2006-28 provides guidance for the credit for building energy-efficient manufactured homes.

How to Apply

To claim the credit, use IRS Form 8908: Energy Efficient Home Credit.

Contact Information

Internal Revenue Service (IRS),
1111 Constitution Avenue, N.W.,
Washington, D.C. 20224
(800) 829-1040.