What is the §45L Tax Credit?
Section 45L offers a tax credit per unit for qualifying energy-efficient single-family and multifamily homes. Available to builders and developers who meet ENERGY STAR® or Zero Energy Ready Home standards, 45L is a powerful incentive that improves project ROI, supports environmental goals, and rewards smart design in new construction and major renovations.
One Big Beautiful Bill Act (OBBBA) Change: The 45L credit is terminated for homes acquired (sold or leased) after June 30, 2026.
While the per-unit credit is still available for qualifying homes acquired before June 30, 2026, projects with acquisition or lease dates after that are ineligible under current law. If you’re planning construction or sale timelines, acting before that cutoff date is essential to capture the full benefit.
Multi Family Homes
What is the 45L Tax Credit? The §45L Tax Credit is a powerful incentive for … Read more
Single Family Homes
The §45L Tax Credit is a powerful incentive for property developers, encouraging energy-efficient construction. It … Read more
45L Tax Credit FAQs
§45L Tax Benefits can be a complicated series of requirements and savings. Below are some of the most frequently asked questions we have received. Below are some of the most frequently asked questions we have received.
Section §45L is an engineered-based tax credit available to builders and developers for the reduction of energy usage in residential buildings. The incentive was initially enacted under the 2005 Energy Policy Act (EPACT) and allows for a significant per unit tax credit.
For Legacy projects placed service prior to 1/1/2023
- Qualifying units are required to have been sold or leased for use as a residence during the tax year.
- Qualifying units must meet or exceed a 50% reduction in savings compared to 2006 IECC Standards
- The units must be modeled by a HERS Rater (or equivalent) substantiating the savings.
For projects initially leased or sold after 1/1/2023
- Projects must be certified for Energy Star or Zero Energy Residential Homes Programs
In general, a dwelling unit is defined as one or more rooms including a kitchen and designed as a unit for occupancy by one family for the purpose of cooking, living and sleeping. In order to meet the requirements of 0145L.
- Apartment or Condo Buildings of 3 Stories or less
- Single Family Homes
- Multi-Family Homes
Yes. In General, tax returns may be amended up to 3 years from the date the return was filed.
Yes, the requirements for a §45L Tax Credit are specific to energy efficiency. Tax code does not currently restrict Low Income Housing from qualifying for a §45L Tax Credit.
It is possible that your CPA has taken other deductions but not necessarily the §45L tax credit. The study is an engineering based approach that CPA’s typically are not qualified to perform in their day to day functions. We would be happy to discuss this further with your CPA and provide any information that your CPA may want regarding the credit.
The limitation is only based on the applicable per unit tax credit amount that applies to the specific property in question depending on the year in which the project is initially sold or leased.
Additionally, tax payers should verify with their CPA that they will not be restricted in the use of the credits due to AMT (Alternative Minimum Tax).
