Energy Savings Credit for Your Property!

[Julio Gonzalez]

The 45L tax credit is an energy efficiency tax credit available to owners, builders and developers of apartment buildings, townhouses, condominiums and single family homes. The units must be more energy efficient than the national energy standards. However, many new builds already exceed these standards, so we recommend that any buildings that were developed over the past four years should be evaluated to see if it is eligible for the 45L tax credit. It was expected to end in 2021, however as part of the Inflation Reduction Act, the credit has been extended through 2032. The qualifications and rules for 2022 remain the same, however they will be adjusted starting in 2023. Here are some questions that I am frequently asked in regards to the 45L Tax Credit.

What is the process to file the 45L tax credit?

After installation of the energy-efficient systems, the contractor must hire an independent certifier to provide certification. The certifier will do computer modeling and onsite testing to create and provide a certification package. They will then certify that all facts are correct and that the home exceeds the energy standards. This certification package is what you will utilize to file the 45L tax credit.

Can I retroactively claim this tax credit?

Yes! You can retroactively claim this credit for properties remodeled or built within the past three years.

If I’m remodeling my property, will that allow me to qualify for the credit?

Yes! “New construction” is defined as brand new construction as well as any “substantial rehabilitation”, upgrading projects and renovations.

What if I’m unable to use the tax credit this year, does the 45L tax credit carry forward?

Yes! It can be carried forward for 20 years.

Is there a maximum number of units that I can claim the 45L tax credit on?

No! As long as your property meets the required qualifications, you can utilize the credit on an infinite number of properties.

What are the energy efficient upgrades that would qualify by property? This is not an exhaustive list, but an example of some of the most common upgrades.

• double-pane or triple-pane window glass to offer isolation and protection;
• hydronic heat system to reduce energy usage; getting hydronic panels can and should blend seamlessly into the architectural design of your home.
• reflective roofing to prevent heat loss;
• HVAC units with a rating of SEER 13+ to avoid high energy usage;
• exterior doors with extra insulation to help maintain the interior temperature;
• R-38+ roof insulation;
• R-13 – R-19+ wall insulation;
• 80+ percent efficiency furnace systems (gas);
• foundations/slabs with extra insulation;
• windows that are vinyl and rated Low E;
• passive solar design to use natural energy;
• structural insulated panels;
• vacuum insulation panels;

Can I certify my own property?

No! Even if you are an authorized certifier, you are not able to check your own units nor can it be anyone that is related to you. An expert must be hired to certify the property in order to claim the credit.

Are you taking advantage of the 45L tax credit on your properties? If not, what other questions do you have?