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45L Federal Tax Credit Extension – What You Need to Know in 2021

This article was originially published January 21, 2020 and has since been updated for 2021.

Great news! The US House and Senate voted to approve the Consolidated Appropriations Act, 2021and it was signed into law on December 27th, 2020. Included in that bill was an extension to the 45L Energy Efficient Homes Tax credit (section 146: Energy Efficient Homes Credit) which was set to expire on December, 31st 2020.

The previous 2020 extender bill contains a retroactive extension of the 45L tax credit beginning on January, 1st 2018 through December 31st, 2020. All homes closed during that period became retroactively eligible for the $2,000/home federal tax credit if they met eligibility requirements. This bill has been extended again for new construction homes, renovations of single family homes, and multifamily units up to 3 stories in 2021!

How do you capitalize on this extension? Great question!

All closed homes during the period from January 1st, 2018 – December, 31st 2019 are retroactively eligible. All homes closed in the 2020 and 2021 calendar year are also be eligible under this current extension.

To qualify we need to demonstrate that your homes’ heating and cooling energy loads are 50% more efficient than a comparable house built to the 2006 IECC AND that building envelope improvements account for at least ⅕ of the 50% energy savings. 

If these metrics are met then you’ll be eligible for a $2,000/home federal tax credit that you can use when filing your taxes.

Seem complicated? That’s where we come in.

Southern Energy Management can systematically analyze your closed homes during that period and provide you with all the documentation you’ll need to provide your tax/accounting teams to claim this credit.

This can be a very challenging credit to qualify for in our climate zones but if your HERS scores are in the low 60s or below then it’s worth a look. You could have thousands in unclaimed tax credits on the table.

Taylor Fearrington, Southern Energy Management Builder Services

Think your homes qualify?

Contact Taylor, our green building specialist, to find out!

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