Tax Credits for Energy Efficient Home Builders

Contractors who build or substantially reconstruct qualified energy-efficient homes may be eligible for tax credits up to $5,000 per home. The amount of the credit depends on factors including the type of home, its energy efficiency and the date when someone buys or rents it.

Eligible Builders and Homes

To be eligible for the credit, contractors must: 

• Construct or “substantially” reconstruct a qualified new energy-efficient home
• Own the home or have a basis in the home during construction, and 
• Sell or lease the home to an individual who will use it as a residence.

A qualified energy-efficient home is a single or multi-family home that is located in the U.S. and purchased or rented by an individual to use as a residence. The home must also meet the applicable energy-saving requirements based on the home type and acquisition date.

Energy-saving Requirements  

To qualify for the Energy Efficient Home Builder credit, the new build or reconstructed home must meet the following standards, including:

• Energy Star program requirements
• Zero energy ready home program requirements
• Prevailing wage requirements

Credit Amounts 

For homes acquired in 2023 through 2032, the credit amount ranges from $500 to $5,000, depending on which standards are met. Builders can receive a credit of:

$5,000 per home for new single-family and manufactured homes that are:

• Part of an ENERGY STAR-eligible building
• Certified by the Zero Energy Ready Home Program

$1,000 per unit for new multifamily homes that are:

• Part of an ENERGY STAR-eligible building
• Certified by the Zero Energy Ready Home Program

Before claiming the credit, builders must certify that their homes meet all requirements under IRC Section 45L.

Contractors claiming the credit should practice good recordkeeping of all documents required to support a claim for the Section 45L credit.

If you have questions about how these changes may affect you, please call 215.675.8364 or email us to speak with a construction accounting professional today.

DISCLAIMER: The WM Update, WM Wednesday Wisdom, WM Daily Update, and other related communications are intended to provide general information, as of the date of this communication, and may reference information from reputable sources. Although our firm has made every reasonable effort to ensure that the information provided is accurate, we make no warranties, expressed or implied, on the information provided. As legislative efforts are still ongoing, we expect that there may be additional guidance and clarification from regulators that may modify some of the provisions in this communication. Some of those modifications may be significant. As such, be aware that this is not a comprehensive analysis of the subject matter covered and is not intended to provide specific recommendations to you or your business with respect to the matters addressed.