The Energy Efficient Home Credit, as established by the Energy Policy Act of 2005 and codified under §45L of the Internal Revenue Code, allows eligible developers to claim a $2,000 tax credit for each newly constructed or substantially reconstructed qualifying residence.
HOW IT WORKS
An eligible contractor must have constructed a qualified energy efficient home as well as owned and had basis in the home during its construction. An eligible contractor may claim the credit for each home that qualifies for the credit if:
- It is located in the United States
- It meets certain energy saving requirements
- It is sold or leased on or before December 31, 2021 for use as a residence (the credit can be taken retroactively for 3 years back or to any open tax year)
- The residence or building must not be more than three stories above grade in height.
The §45L credit not only includes new construction, but reconstruction and rehabilitation projects. The incentive applies to single-family homes as well as condominiums, apartment complexes, and other multifamily residential buildings whereby each unit may qualify for a $2,000 credit. Certification must be obtained to verify that the home satisfies specific energy efficiency requirements. Further, certification must be done using an independent, qualified individual to verify and certify that the property installed satisfies specific energy efficiency requirements using IRS-approved software. A site visit is required to verify installation of the energy efficient features. The tax credit is filed using IRS Form 8908, Energy Efficient Home Credit.
HOW WE HELP MASSACHUSETTS TAXPAYERS
Through our Massachusetts office in Boston, ICS Tax can perform free assessments to pre-qualify the residences, coordinate with your tax preparer to claim the credit, and provide the certifications of compliance.