What is the Section 45L Builders Tax Credit

The Section 45L Builders tax credit is a part of the Energy Policy Act of 2005 which was signed into law on August 8, 2005 by President Bush.

Section 45L stipulates that the Eligible Contractor may take a $2000 tax credit for each residence or residential unit that is certified to fall within the energy efficiency guidelines as outlined in the code.  An example of this would be if you had a 100 unit apartment building that met the guidelines of the code you would be eligible for a $200,000 credit

What qualifies as a residence

A residence is defined as a dwelling unit that provides complete living facilities for one or more persons including facilities for preparing food, personal hygiene and sleeping. In order to qualify for the 45L credit the unit must be in a structure that is 3 stories or less above grade.

There are many buildings included in this definition including:
* Traditional Homes
* Apartment Complexes
* Senior Living Facilities
* Condominiums

Who is the Eligible Contractor

According to the IRS definition the "eligible contractor is the person that constructed a qualified energy efficient home. A person must own and have a basis in the qualified energy efficient home during its construction to qualify as an eligible contractor with respect to the home. For example, if the person that hires a third party contractor to construct the home owns and has the basis in the home during construction, the person that hires the third party contractor is the eligible contractor and the third party contractor is not an eligible contractor."

What are the requirements for a unit to be certified

* Construction must have been substantially completed after August 8th, 2005 and before December 31, 2013. (There is speculation that the credit will be extended following the 2012 Elections)
* The residence must have been placed into service no earlier than Jan. 1, 2006 and no later than December 31st, 2013
* The unit must meet the above definition of a residence
* The residence must meet heating and cooling energy consumption requirements of section 45L(C) and be certified in accordance with guidelines prescribed by the IRS