How to Benefit From the 45L Energy Tax Credit

The energy efficient home tax credit also known as the 45L Tax credit is a great benefit that has managed to leverage the construction costs of some homeowners and contactors. It is still quite disheartening how this substantial and easy to access benefit has eluded so many would be beneficiaries. This has mainly been due to lack of proper information on the existence of the benefit, what it represents and how one can qualify and claim. After reading this, you must have grasped the whole concept of the benefit and be in a position to satisfy all the requirements for eligibility as well as claim your benefit.

45L Energy Tax Credit

What Is The 45L Credit For The Energy Efficient Home?

The 45L tax credit is a tax provision governed by the Internal Revenue Code Section 45L and fiscal legislation in the form of the American Taxpayer Relief Act of 2012. It pertains to the energy efficient homes that are constructed by an eligible contractor and acquired from the contractor by a person with the intention of being used as a residential place during the tax year. The benefit is a total of $2000 for every qualifying unit.

Your Property Must:

  1. Be located in the US.
  2. Have been substantially finished by the 31st of December 2013 and after the 8th of august 2005.
  3. Meet the energy saving standards set out in the 2003 International Energy conservation Code and the Internal Revenue Code section 45L(c).
  4. Have been certified in line with the IRS prescription which requires it to have an annual heating and cooling energy consumption projection meeting a 50%reduction of energy use.
  5. Be a new construction, a reconstruction or even rehabilitation.
  6. Be a dwelling single unit that provides complete and independent living amenities for one or more people. This must naturally include allowance for sleeping, living, cooking, eating and sanitation.
  7. Must not be more than 3 stories high and houseboats, condominiums, traditional homes as well as house trailers can also qualify.
  8. Not necessarily be your principal residence.

How to Claim Your Benefit

Claim Your BenefitBefore you embark on claiming the benefit that is commensurate with your property, you must realize that the benefit is not paid out in cash but is rather enjoyed in the form of a reduction in your tax an obligation that is equal to your benefit. In short you get to pay low or no taxes depending on the value of your credit.

In Order to File a Successful Claim, You Must Ensure That:

  1. You are eligible to claim for the property
  2. Your property is eligible in terms of its type and the date of completion of either construction or remodeling
  3. The energy saving levels are eligible and certified by a qualified professional
  4. You have kept all the necessary paperwork

Tax CreditsYour whole claim under the 45L credit is hinged on the existence of a detailed energy analysis. You must get a qualified third party to certify this energy analysis.

Fill in form 8908 of the department of the Treasury Internal Revenue Service if you are an eligible contractor and attach your tax return. More information on what is required on this form can be found on IRS.Other non-partner or corporation entities need not fill in this form but report the credit directly by way of Form 3800.

Submit your application together with any supporting documents to the Internal Revenue Services for consideration. You must always remember to keep copies of all the documents in order to be on the safe side in case of any audits by the IRS.


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