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Have you constructed a residential unit in 2014 following energy efficiency requirements? The electricity savings produced by the project could potentially qualify you for a 45L credit. The incentive is available for residential projects executed throughout 2014, so take the time to figure out whether your project meets all of the criteria.
Property Requirements
The section 45L credit is available for residential projects executed on the territory of the US. The property should have been completed and occupied prior to December 31, 2014.
The dwelling unit should be located in a building that is at most three-stories high. In other words, the incentive applies to the construction of apartment buildings and residential condominiums or the rehabilitation of older such buildings.
To qualify for a section 45L incentive, the building should have heating and cooling energy consumption that is 50 percent lower than the one of a comparable residential unit. Third party certification will be needed to prove the energy efficiency of the building.
Who can Get the 45L Credit
The eligible contractor is the one that can claim the energy efficiency taxation incentive for 2014.
The contractor is defined either as the individual who constructed the new residential unit or the manufacturer of an energy efficient manufactured home.
Energy Savings
In order to qualify for the taxation incentive, the dwelling unit should have energy consumption that’s 50 percent lower than the requirements listed in the 2006 International Energy Conservation Code.
The 2006 energy conservation code features requirements and prescriptions for both commercial and residential energy-efficient buildings. These focus on roofing materials, floors, fenestration, opportunities for reducing air leakage, HVAC equipment performance and lighting.
If the building is independently certified to correspond to these requirements, the contractor will be eligible for a home tax credit of up to 2,000 dollars.
Qualification and Application Process
If you believe that your 2014 dwelling unit project corresponds to the above mentioned requirements, you’ll need to ask for an independent evaluation and certification. The parties responsible for the process use accredited software to make the energy savings calculations.
The energy features of the dwelling unit will also have to be inspected and assessed on site.
Don’t hesitate to seek certification, especially if you executed a larger project in 2014. Several case studies show that the amount provided under section 45L can be impressive. According to one of the case studies, a contractor that constructed 83 dwelling units (all of which adhering to the energy efficiency requirements) got a tax credit of 166,000 dollars for the entire project. The project certification fee in this case was 36,000 dollars and the net benefit was 144,000 dollars.
An eligible certifier is any licensed third party that has no relationship with the contractor that has been accredited by the Residential Energy Services Network or another rating network of the same caliber.
Getting certified for a 45L credit is far from a challenging task, as long as you find a reliable partner. Many new buildings adhere to the strictest energy efficiency requirements, which qualifies them for an incentive automatically. Get started with the certification right now, if you want to make use of the incentive for your 2014 residential project.
Steve Nanos
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