Energy Efficient Home Tax Credit

Time Running Out on the Energy Efficient Home Credit

Last year’s Tax Bill extended the Energy Efficient Home Credit (the “45L credit”) until the end of 2011. While there has been some discussion of extending the program further, it would be unwise to assume this; eligible contractors who have not taken advantage of this program should plan to do so now—particularly because qualifying for the credit requires significant preparation. (An eligible contractor is the person who owns and has basis in the property during construction and who sells/leases the property for use as a residence.)

The program provides eligible contractors (those who performed the construction) to receive a $2,000 federal tax credit for each freestanding home, townhouse or apartment unit that meets specified requirements related to energy efficiency, completion date and other factors. Manufactured homes are eligible for a $1,000 credit.

Demonstrating the mandated energy efficiency requires certification from an approved rater who has been qualified by the Residential Energy Services Network (RESNET), a national organization that focuses on energy efficiency and related standards for testing, accreditation and reporting.

Industry averages suggest that only 25 percent of dwelling units qualify for a 45L credit when assessments are performed on completed projects. To mitigate against this, contractors seeking to apply for 45L credits for existing construction need to have their properties thoroughly evaluated in advance so that potential shortcomings can be addressed.

For a detailed discussion of the potential benefits, necessary steps and other important information on the Energy Efficient Home Credit, please, see our white paper “Leveraging the Energy Efficient Home Credit: A guide for contractors as the deadline approaches.”  The paper is posted on the Resnick Group website here.

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