Changes to Section 45L Tax Credit: On September 27, 2023, the IRS released notice 2023-65, providing crucial details on the revamped energy-efficient home credit under Section 45L.
The notice provides long-awaited details on the revamped energy-efficient home credit under section 45L, as amended by the Inflation Reduction Act (IRA) of 2022.
Let’s explore the key changes in the Section 45L tax credit and the guidance provided by the IRS.
Shift in Qualification Criteria
One of the significant shifts in the qualification criteria for the Section 45L tax credit is the transition from the 2006 International Energy Conservation Code (IECC) to current ENERGY STAR standards and the DOE’s Zero Energy Ready Homes Program (ZERH).
This change marks a significant shift in the landscape of energy-efficient home credits.
Applicable Amount of the Credit
The amount of the tax credit is contingent on the energy-saving requirements that the home meets.
It can range from $500 to an impressive $5,000 for each qualified new energy-efficient home.
The actual amount of the credit depends on eligibility requirements such as the type of home, energy efficiency, and, in the case of multifamily dwelling units, whether prevailing wage requirements are met.
Effective Date and Certification Requirements
The amendments to the Section 45L tax credit apply to qualified new energy-efficient homes acquired after December 31, 2022, and encompass homes purchased until December 31, 2032.
For homes acquired between 2023 and 2032, the certifications achieved and standards met include ENERGY STAR program requirements, Zero Energy Ready Home program requirements, and prevailing wage requirements for multifamily dwelling units.
The IRS’s release of guidance on the Section 45L tax credit brings about significant changes in eligibility requirements and certification criteria. The shift towards ENERGY STAR compliance reflects a stronger emphasis on sustainable and energy-efficient homes.
As these changes take effect, it is crucial to partner with experts in the field who can guide you through the intricacies of the tax credit and help you maximize its benefits.
If you don’t know, we’ve put together a complete guide on how to get the most from the Inflation Reduction Act.
How Green Insight Can Help
With these changes in effect, it is essential to maximize the benefits of federal tax incentives. Green Insight, a trusted partner in the field of green building and energy efficiency, is ready to guide you through the entire process.
Whether you need assistance with understanding the new certification requirements or navigating the intricacies of the Section 45L tax credit, our team of experts is here to help.
Contact us today or call us at 833-GRN-TEAM (476-8326) to get the most out of your federal tax incentives and embark on a sustainable path toward a greener future.