The 45L Tax Credit is Expiring (Again)!

45L Tax Credit Expires?

The current 45L tax credit for energy efficient new homes is set to expire on Dec. 31, 2021. New residential units, including single families and low-rise apartments sold or leased by that date, are eligible for the $2,000 credit if they perform 50% better than 2006 IECC standards. Builders can go back up to 3 years to claim the credit, and it’s good for 20 years. While this 45L tax credit expires, there will be updates to a new 45L program on the horizon

 

What Next?

The Department of Treasury has published a new proposal to extend and enhance energy efficiency with the 45L Tax Credit.

 

The proposal currently in Congress would:

“Increase the section 45L tax credit for an energy efficient home from $2,000 to $2,500 and extend the tax credit five years to December 31, 2026. The proposal would also modify and expand the dwelling units eligible for the credit. For new energy efficient homes, the required energy savings percentage would increase from 50 percent to 60 percent under the 2006 IECC standards. In addition, certified Energy Star homes would also be eligible for the 45L tax credit as well as dwelling units with annual heating and cooling consumption at least 15 percent below the annual energy consumption level of a comparable dwelling unit under the 2018 IECC standards. The proposal would be effective after December 31, 2021.”

Original Treasury Document: https://home.treasury.gov/system/files/131/General-Explanations-FY2022.pdf

 

What can Builders, Energy Consultants & HERS Raters do to prepare?

While it’s just a bill in Congress at this point there seems to be little controversy over this change, which is a long time coming. We at CHEERS 45L will continue to post news items important to our community to help you keep up to date.

In the meantime, Builders will benefit greatly from bringing their HERS Rater in together with the Energy Consultant during the planning stage. There are two reasons for this:

  1. HERS Raters usually have access to more modeling tools, like CHEERS 45L, and their experience compliments that of the Energy Consultant. This helps ensure better outcomes in the form of increased energy efficiency and comfort, lower costs, and maximum subsidy.  HERS Raters and Energy Consultants represent two sides of the same coin. Without both of them builders only get half the story.
  2. Plans change. HERS Raters frequently confront circumstances where the built unit differs from the plan, putting code inspections and eligibility for different subsidies at risk. If allowed, a good HERS Rater acts as an early warning system for Builders to make any required amendments at the least expensive moment.

 

Questions about the 45L Tax Credit? We have answers. Don’t leave money on the table! Call CHEERS 45L today for your complimentary 45L plan review!

 

Bruce Edgar

877.200.8303

bedgar@cheers45l.com

www.cheers45l.com