45L – Single Family Homes - Walker Reid Strategies

§45l Tax credit

Single Family Homes

What is the 45L Tax Credit?

The §45L Tax Credit is a powerful incentive for property developers, encouraging energy-efficient construction. It offers developers a tax credit per each qualified dwelling unit that meets specific energy-savings standards. To be eligible, construction or substantial rehabilitation must be initially leased or sold in the tax year in which the credit is to be taken, open amenable tax years are eligible to claim the credit.

Eligible Properties

Qualifying properties include dwelling units designed for occupancy by one family. These properties may include apartments, condominiums, assisted living facilities, student housing, townhouses, and single-family homes. Each unit within the building is eligible for the tax credit.

Projects initially leased in tax year 2022 or before have a limit of 3 stories or less to be able to qualify for the incentive.

Starting in 2023 and later mid-rise and high-rise projects are now eligible to be certified and the projects are no longer limited to the 3 story of less requirement.

Who is the Eligible Contractor?

The eligible contractor is the person or company that owns and has a basis in the qualified energy-efficient home during its construction. Third-party contractors are not eligible contractors.

(Initially Leased or Sold -Prior to 1/1/2023)

LEGACY §45L TAX CREDIT CERTIFICATION REQUIREMENTS

An eligible contractor must obtain certification from an independent eligible certifier before claiming the energy home credit with respect to the dwelling unit. An eligible certifier is a person not related to the eligible contractor who has been accredited or otherwise authorized by the Residential Energy Services Network (RESNET) or an equivalent rating network. The certifier conducts computer modeling and on-site testing and prepares a certification package with a declaration that under penalties of perjury, the certifier believes that the facts presented in the certification are true, correct and complete. The fee for certification is typically charged on a per-unit basis.

Efficiency Standards and Certification Requirements

§45L TAX CREDIT ENERGY SINGLE FAMILY HOMES

REQUIREMENTS	PRE-IRA (TAX YEAR 2022 AND PRIOR)	POST-IRA (TAX YEAR 2023 THROUGH 12/31/2032)
QUALIFICATION REQUIREMENTS	Units must meet energy efficiency standards 50% higher than the 2006 IECC standards, with 10% of the saving being achieved from the building envelope	Units may be certified under either the Energy Star new Homes and multifamily programs and for an increased credit amount the DOE- Zero Energy Ready Homes Program (ZERH)
HEIGHT REQUIREMENTS	No height restriction for SFH	No limitation of stories for the energy star program. Limited to 5 Stories or Less for ZERH
TAX CREDIT AMOUNT	$2000/per unit	**$2500 for Energy Star $5000 for ZERH
TAX YEAR ELIGIBILITY	Eligible for new homes initially sold or leased until 12/31/2022 and prior open amendable tax years	Eligible for new homes initially sold or leased after 12/31/2022 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.

**Prevailing wage is not a requirement for Single Family Homes.

(Projects initially leased in 2023 or later)

ENERGY STAR/ZERH 45L TAX CREDIT PROCESS FLOW

Initial Consultation - Identifying Opportunities

Step 1

At Walker Reid Strategies, we kickstart the process with an initial consultation to determine if your project is a viable candidate for the Energy Star or Zero Energy Ready Home (ZERH) program. During this phase, we’ll engage in a detailed discussion covering:

– Opportunities and Risks: We’ll evaluate the financial incentives available, assess prevailing wage requirements, and identify any technical construction prerequisites that might affect your project’s eligibility. This step helps us uncover potential hurdles and opportunities.

– Green Building Integration: We explore additional green building consulting opportunities that can seamlessly integrate with the tax credit program, maximizing your benefits.

– Early Engagement: We emphasize the importance of early involvement, ideally during preconstruction activities, to optimize project outcomes.

Step 1

Step 2

Technical Feasibility Review

Step 2

If you express interest after the initial consultation, we proceed to an in-depth technical feasibility review. During this phase, we evaluate whether your project meets the Energy Star or ZERH program requirements or determine what adjustments are necessary to qualify. Our goal is to ensure your project aligns with the program’s goals and standards.

Energy Modeling and Training

Step 3

Upon engagement, the Walker Reid team takes charge. We conduct comprehensive energy modeling as mandated by the program’s standards. Additionally, we provide essential training to your developer and builder team on crucial milestones required to attain the desired certifications. If design changes are needed to meet the criteria, we’ll make recommendations at this stage.

Step 3

Step 4

Preconstruction Support

Step 4

Throughout the construction phase, our pre construction team remains at your disposal. We assist in addressing queries, track project progress, and provide the necessary checklists for your builder/developer team to complete. Our goal is to ensure your project stays on track and compliant with program requirements.

Pre-Drywall Inspections - A Critical Step

Step 5

This phase is pivotal. We conduct mandatory pre-drywall inspections to verify that the project aligns with the Energy Star or ZERH standards. This step is critical and cannot be missed, as it ensures compliance with program requirements before the project advances further.

Step 5

Step 6

Ongoing Support and Additional Certifications

Step 6

Walker Reid continues to offer ongoing support as needed. We assist with any additional green building certifications you may seek, simultaneously completing models and documentation required for these certifications. Our commitment is to help you achieve the highest levels of sustainability and energy efficiency.

Final Site Inspections and Deliverables

Step 7

Before the project concludes, our team performs final site inspections to validate compliance with all program criteria. We then compile and deliver the final project documentation and deliverables.

Step 7

Step 8

Submittals to Governing Authorities

Step 8

We take care of submitting all required documentation to the relevant governing authorities for their review and certification. Our experience ensures a smooth and efficient process.

Tax Credit Claiming

Step 9

Finally, we provide your tax team with all necessary documentation and support for the successful claiming of the tax credits. We ensure that you receive the financial benefits you’re entitled to under the §45L Tax Credit program.

At Walker Reid, we are committed to guiding your project through every step of the process, from initial assessment to certification and tax credit claiming. Our expertise and dedication will help you navigate the intricacies of the program and maximize your project’s success. Contact us today to get started on your path to energy-efficient and sustainable building solutions.

Step 9

Let Us Help Navigate Your Journey!

Speak with one of our tax experts today to determine project qualification and additional savings

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