Section 45L Energy Efficient Home Tax Credits

May 4, 2011, 2:04 PM

Some developers may still be able to amend their federal tax returns to retroactively claim Energy Efficient Home Tax Credits under Section 45L of the Internal Revenue Code as long as the return is amended before the expiration of the three year federal statute of limitations.

Section 45L provides a tax credit of $2,000 per dwelling unit to apartment, condominium and single-family residence developers of energy efficient buildings completed after August 8, 2005. The following types of projects may qualify for Section 45L credits:

  • Apartment buildings
  • Residential condominiums
  • Production home developments
  • Substantial reconstruction
  • Rehabilitation
Other Criteria:

The dwelling unit must have been substantially completed after August 8, 2005 and before December 31, 2011.

The dwelling unit cannot be located in a building that exceeds three stories in height.

The dwelling unit must be used as a residence (i.e. occupied).

The dwelling unit must be certified in accordance with IRS guidance to have a projected level of annual heating and cooling consumption that meets the standards for a 50% reduction in energy usage as compared to 2004 energy standards.

Eligible contractors include a party (i.e. an individual, trust, estate, partnership, association or a corporation) who owns and has a basis in the qualified energy efficient dwelling during its construction.

Section 45L credits can be carried back one year and carried forward twenty years, however for credits generated in 2010, the carry back period is four years.

Other Considerations:

The depreciable basis of the building in which the dwelling units are located must be reduced by the amount of the Section 45L tax credits. --Saundra R. Hirth