Residential builders stand to benefit from energy-efficiency credit extension

September 13, 2022

The recently-enacted Inflation Reduction Act comes with good news for builders of energy-efficient homes. The act extends the 45L tax credit for energy efficient homes has been extended by the Inflation Reduction Act through December 31, 2022. This $2,000 per unit credit applies to multifamily units three stories or less (above grade) and single-family homes first occupied in an open tax year and prior to January 1, 2023.

Properties first occupied after December 31, 2022 must meet increased energy standards as set forth by The Environmental Protection Agency’s ENERGY STAR Program and may qualify for a tax credit ranging from $500 to $5,000 per home. More details on program requirements and incentives will be coming in future blog posts.

This tax benefit was created to incentivize multifamily and single-family home builders to construct energy efficient homes, which will not only use less energy and have lower energy bills, but also reduce carbon emissions in the atmosphere.

At Eide Bailly, projects are fully vetted by our team of Professional Engineers, HERS Raters and energy modelers to verify the feasibility of a 45L tax credit study. Contact Kristin Gustafson, PE Director of Energy Efficiency Incentives to learn more about how this tax credit can benefit you.

There are other tax incentives available that encourage environmental sustainability building practice that we will cover in future posts. The § 179D Commercial Buildings Energy Efficiency Tax Deduction allows for up to $5.00 per square foot for building owners and designers of governmental properties.  The § 45Q Carbon Capture & Sequestration Credit allows for up to $50 per metric ton of carbon captured.

Related: Energy-Efficient Contractors Get A Benefit with the Extension of 45L

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