On January 2, 2013, President Obama signed the American Taxpayer Relief Act of 2012 (The Act).
The Act extends the energy efficient home credit (the 45L credit) through 2013. The 45L credit provides eligible contractors with a tax credit for each energy-efficient dwelling unit.
To qualify for the 45L credit, the building must be three stories above grade or less (not including below-grade parking).
Energy Savings Requirements
• 50% Energy-Efficient Standard – The credit is $2,000 for a dwelling unit that is certified to have an annual level of heating and cooling energy consumption at least 50% below the annual level of heating and cooling energy consumption of a comparable dwelling unit and has building envelope component improvements that account for at least 1/5 of the 50% reduction in energy consumption.
• 30% Energy-Efficient Standard – The credit is $1,000 for a manufactured home that does not meet the 50% energy requirements but is certified to have an annual level of heating and cooling energy consumption at least 30% below the annual level of heating and cooling energy consumption of a comparable dwelling unit and has building envelope component improvements that account for at least 1/3 of the 30% reduction in energy consumption.
Who Is The Eligible Contractor?
The 45L credit is available to an eligible contractor in the year the certified dwelling units are leased or sold. Previously, there was some confusion as to who qualifies as the eligible contractor with respect to the home. For purposes of 45L, a person must own and have basis in the qualified energy efficient home during the construction to qualify as the eligible contractor with respect to the home. For example, if a person hires a third-party contractor to construct the home and owns and has basis in the home during its construction, the person that hires the third-party contractor is the eligible contractor and the third-party contractor is not the eligible contractor.
Other Tax Considerations
• The 45L credit is an IRC Section 38 business credit.
• General business credits generally are not allowable as a credit to offset Alternative Minimum Tax.
• The 45L credit reduces the taxpayer's depreciable basis.
• The credit is claimed on the tax return for the year in which the dwelling units are leased or sold.
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This advice is not intended or written to be used for, and it cannot be used for, the purpose of avoiding any federal tax penalties that may be imposed, or for promoting, marketing or recommending to another person, any tax-related matter.