WE SPEAK YOUR LANGUAGE

Unlocking Savings with the 45L Tax Credit

Sustainable building practices are increasingly part of how residential developments are designed, financed and marketed. Section 45L provides a powerful incentive for builders and developers who construct energy-efficient homes, offering tax credits of up to $5,000 per qualifying unit when specific standards are met.

With recent expansions to the credit, Section 45L applies to a broader range of residential projects, including single-family, multi-family, and high-rise developments. Our real estate and tax advisors help clients evaluate eligibility, manage certifications and integrate 45L into a broader tax strategy that supports long-term planning and profitability.

Projects that commenced construction or were acquired before the June 30, 2026 deadline may still qualify under 179D and 45L Extension Rules subject to documentation requirements.

Real Estate Companies

Homebuilders

Residential and Commercial Owners, Property Managers and Developers

Residential and Mixed-Use Developers

REITS - Real Estate Investment Trusts

Multi-family Property Owners and Operators

SECTION 45L SERVICES

Private Equity

Eligibility and Certification Coordination

Determining whether homes qualify for the Section 45L credit requires careful evaluation of energy standards, timelines and property types. Many builders assume eligibility is determined after construction, when in reality early coordination plays a critical role in maximizing credits.

 

We review residential projects to assess eligibility criteria and coordinate required certifications with qualified third-party professionals. Our approach helps streamline compliance while minimizing disruption to construction schedules.

 

This helps address common challenges such as:

  • Uncertainty about which homes or units qualify
  • Missed credits due to late certification planning
  • Confusion around ENERGY STAR vs. DOE program requirements
  • Inconsistent treatment across scattered developments

Tax Planning

Credit Calculation and Documentation

The value of the Section 45L credit depends on home type, program certification and applicable wage requirements. Without clear tracking, credits can be under-claimed or inconsistently applied.

 

We calculate available credits at the unit level and assemble documentation that clearly supports each credit claimed. This structured approach ensures alignment between certifications, financial records and tax filings.

 

This service helps builders:

  • Capture credits consistently across large portfolios
  • Avoid under-claiming due to incomplete documentation
  • Maintain clean records as projects scale
  • Reduce administrative burden on internal teams

Business Tax

Filing Support and Credit Substantiation

Claiming the 45L credit involves more than qualifying homes. Proper forms, schedules and substantiation must be prepared and retained in case of review.

 

We provide end-to-end filing support, coordinating with tax preparers and internal accounting teams to ensure credits are applied accurately and supported by complete documentation.

 

This support helps reduce:

  • Filing errors or omissions
  • Exposure during IRS inquiries
  • Disconnects between project teams and tax teams
  • Rework caused by missing or inconsistent data

Strategic Planning for Future Developments

Section 45L can be a strategic tool, not just a retroactive credit. Developers who plan for energy efficiency early are better positioned to qualify consistently and maximize credits over time.

 

Our team of partners work with clients to assess upcoming projects, align design and construction practices with evolving standards, and build a repeatable process for claiming credits across future developments.

 

This approach helps clients:

  • Incorporate tax strategy into project planning
  • Adapt to changing energy standards
  • Improve predictability of tax benefits
  • Strengthen long-term development economics

FAQs

What is the Section 45L tax credit?

Section 45L is a federal tax credit for builders and developers who construct energy-efficient residential homes that meet designated standards.

Who can claim the 45L credit?

Eligible contractors, including homebuilders and developers who construct or substantially renovate qualifying residential units, may claim the credit.

How much is the 45L credit worth?

Credits can be worth up to $5,000 per qualifying home or unit, depending on certification and construction standards.

Does 45L apply to multi-family developments?

Yes. Multi-family and high-rise residential properties may qualify when energy efficiency requirements are met.

Is certification required to claim the 45L credit?

Yes. Certification by qualified third-party professionals is required to substantiate eligibility.

Can 45L be combined with other incentives?

In many cases, Section 45L can be coordinated with incentives such as Section 179D and cost segregation to maximize overall tax benefits.

When should builders evaluate 45L eligibility?

Ideally during project planning or construction but completed projects may still qualify if documentation is available

OUR REAL ESTATE ADVISORS

Micah Greenberger

Real Estate Practice Leader & Tax Principal

Gary Gruner

Principal, Tax

REAL ESTATE ASSOCIATIONS