Energy Efficiency Tax Credits – Section 45L and 179D

Section 45L Tax Credits

Your project likely qualifies for a $2,000 tax incentive per qualifying unit, renewed by the US Congress on December 18, 2016 as part of the Omnibus spending bill.  It is renewed for the building completed in the next several years, so discover if your home or building will qualify.

Qualifying for Section 45L Energy tax credits

How does a home or multifamily unit qualify? It must be tested and verified and shown to  achieve a 50% reduction in heating and cooling when compared to national standards of 2003. The 45L Tax Credit of $2,000 per dwelling unit to developers of energy efficient apartment buildings and homes. Based on current construction trends, and due to current energy codes, many buildings are constructed that already exceed these standards and qualify for the 45L tax credit. If you are involved with an apartment building or residential condominium development completed within the last 4 years, contact us to evaluate your  potential for 45L tax credits. Eligible construction also includes substantial reconstruction and rehabilitation (gut rehab). And best of all, developers can still claim the 45L tax credit retroactively.

Example Benefit Scenarios:

▪ New construction apartment with 50 qualified units = $100,000 in 45L tax credits for the owner
▪ Gut rehab completed in 2013 with 250 qualified units = $500,000 in 45L tax credits
▪ Development of mulitple condo buildings with 1000 qualified units = $2,000,000 in 45L tax credits

How the 45L tax credit process works:

The basis for developing and supporting the Section 45L tax credit is a detailed energy analysis by a qualified energy rating firm such as Eco Achievers. Our team of raters and engineers will ensure that you obtain the maximum tax credits and provide you with all the documentation necessary to substantiate your claims in the event of an IRS audit. First, an energy model is developed from architectural plans. Next, field measurement and verification of the building's performance is done using tools such as blower door and duct leakage measurement in order to assess the energy efficiency of the units as built. The field conditions are reconciled with the energy model and a final report is developed showing the unit efficiency and identifying whether it qualifies for the Section 45L tax credit.

While the tax credits is a windfall for mulitfamily owners and developers, it is still available for single-family home builders / developers as well, but unfortunately not for the  home's owners.

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