Energy Efficient Properties

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Energy Efficient Homes - Section 45L

Harnessing Tax Incentives for Energy-Efficient Homes with IRS Section 45L

IRS Section 45L is a federal tax incentive designed to promote energy efficiency in residential construction. This tax credit encourages builders and developers to incorporate energy-efficient features into new or substantially renovated homes.

residential buildings

Key Benefits:

1. Tax Credit:

Under Section 45L, eligible developers can claim a tax credit of up to $2,500 for Energy Star and $5,000 for ZERH per qualifying dwelling unit.

2. Eligible Properties:

To qualify for the tax credit, the residential units must meet specific energy efficiency standards. This incentive applies to both single-family and multi-family dwellings, making it a versatile option for a range of residential construction projects.

3. Energy Efficiency Criteria:

Dwelling units may be certified under either the Energy Star New Homes and Multifamily programs or for the increased credit under the DOE – Zero Energy Ready Homes Program (ZERH).

How to Qualify:

To qualify for the Section 45L tax credit, builders and developers must adhere to the following criteria:

  • Energy Efficiency Certification: The homes must be certified by a qualified individual or a licensed professional, confirming that they meet the required energy efficiency standards. 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.
  • Placed in Service: The homes must be completed and placed into service during the tax year for which the credit is being claimed.

IRS Section 45L presents a significant opportunity for builders and developers to contribute to energy efficiency while enjoying financial incentives. By incorporating energy-efficient features into residential construction projects, developers not only meet regulatory standards but also unlock valuable tax credits.

For personalized advice and assistance in navigating theSection 45L tax credit, contact our team of experts. We specialize in optimizing your benefits while ensuring compliance with energy efficiency standards.

IRS Section 179D Energy Efficient Commercial Buildings Deduction

Optimize Your Building's Efficiency and Maximize Tax Savings

The Section 179D deduction is available for newly constructed or renovated properties that meet specific energy savings requirements.  The Inflation Reduction Act significantly expanded the program and increased the deduction to up to $5.00 per square foot.  The deduction is specifically applicable to commercial buildings that make substantial reductions in their energy consumption related to interior lighting, heating, cooling and building envelope improvements.

office building

Who is Eligible?

  • Owners of commercial buildings
  • Non-profit organizations
  • Tribal governments
  • Religious organizations
  • Private schools or universities
  • Contractors of government owned buildings (by having the government entity sign an allocation letter)
  • Architects
  • Engineers
  • Designers

Properties placed in service after January 1, 2023 can qualify for the increased deduction of up to $5.00 per square foot by meeting the prevailing wage and apprenticeship requirements.  For properties that do not meet the prevailing wage and apprenticeship requirements, the deduction is limited to up to $1.00 per square foot.

Navigating the changes to Section 179D can be overwhelming.  Contact Monetek today for a no cost consultation.

Unlock Tax Benefits with Monetek

Are you maximizing your credits and incentives? At Monetek, we specialize in optimizing business credits and incentives.  Our dedicated team understands the complexities of credits and incentives law and how to navigate them to ensure you receive the maximum benefits available.  With our tailored services, we help you uncover opportunities to reduce your tax liability.

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