Did you know developers can get up to $2,000 per unit for energy-efficient construction!? Many developers are eligible for a substantial tax incentive under the 45L Tax Credit program. By leveraging this credit, multifamily developers unlock considerable savings, making it easier to invest in future developments. Read on.
Understanding the 45L Tax Credit
The 45L Tax Credit is a federal incentive program designed to promote energy efficiency in residential buildings. It financially benefits eligible contractors constructing or manufacturing energy-efficient homes or residential units.
Requirements
Developments Pre-IRA (Tax Year 2022 and Prior):
- Units must meet energy efficiency standards 50% higher than 2006 IECC standards, with 10% savings from the building envelope.
- Buildings are limited to 3 stories or less.
Developments Post-IRA (Tax Year 2023 through 12/31/2032):
- Units may be certified under Energy Star New Homes and Multifamily programs or the DOE Zero Energy Ready Homes Program (ZERH).
- Energy Star has no story limitation; it is limited to 5 stories for ZERH.
- Eligible for new developments initially sold or leased after 12/31/2022.
- Pre-drywall inspection is required.
Benefits of the 45L Tax Credit
The 45L Tax Credit offers significant financial benefits, including:
- Cost Savings: Developers can receive up to $2,000 per unit for developments pre-IRA. For developments post-IRA, the tax credit amount if the prevailing wage is met is $2,500 for Energy Star and $5,000 for ZERH. If the development does not meet the prevailing wage, the tax credit amount is $500 for Energy Star and $1,000 for ZERH.
- Increased ROI: By reducing the overall tax liability, developers can improve the return on investment for their projects.
- Enhanced Marketability: Energy-efficient buildings are increasingly in demand, and the tax credit can help developers offer more competitive, sustainable options.
- Reinvestment Opportunities: The savings gained from the tax credit can be reinvested into future projects, further enhancing the developer’s portfolio and market presence.
BASE4 Is Here to Help!
BASE4, as an innovative architecture and engineering firm, can assist multifamily developers in maximizing the benefits of the 45L Tax Credit program. By leveraging our expertise in energy-efficient design and advanced Building Information Modeling (BIM), we ensure that your projects meet the stringent requirements for this tax incentive.
- Our team of experts provides comprehensive support, from the initial design phase through to third-party verification and certification, simplifying the complex process and making it easier for you to capitalize on the tax credit.
Thank you,
Blair Hildahl
BASE4 Principal
608.304.5228
BlairH@base-4.com
