The 45L tax credit is allowed to an eligible contractor that constructs a home, including multifamily rentals, that meets the energy savings requirements of the tax credit. The applicable amount of the credit is contingent on which set of energy saving requirements the home meets, and is $500, $1,000, $2,500 or $5,000.

To be eligible for a 45L energy-efficient home credit, a dwelling’s heating and cooling energy consumption should fall below certain national energy standards. Most new developments are already constructed with energy efficiency in mind based on current trends and desires by homeowners to run greener homes.

To qualify for the 45L tax credit, a dwelling unit must be certified to be at least 50% more energy efficient than a similar unit constructed in accordance with the 2006 International Energy Conservation Code, with 10% being derived from building envelope component improvements.

The credit benefits the qualified builder or developer, directly, and indirectly benefits future owners and occupants of the housing through lower energy bills. The home must be sold, leased, or rented out to qualify for the 45L tax credit.

To qualify for the 45L tax credit, a dwelling unit must meet or exceed Energy Star 3.1 requirements.