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The 45 L Tax Credit is a valuable tool that provides builders and developers with tax credits for residential and apartment buildings. This credit was extended retroactively in late 2019 for 2018 and 2019 thru December 31, 2020. Any unused credits can be carried forward for 20 years.
This tax credit is equal to $2,000 per residential unit or dwelling to the developers of energy efficient buildings less study cost. Qualifying properties include apartments, condominiums, townhouses, and single family homes.
Qualifying properties are comprised of a dwelling unit or units. A dwelling unit is defined as one or more rooms including a kitchen and designed as a unit for occupancy by one family for the purpose of cooking, living and sleeping. In order to meet the requirements of Section 45L, it must also be 3 stories or less above grade and may include apartments, condominiums, assisted living facilities, student housing dwelling units, townhouses, and single-family homes.
The $2,000 tax credit is achieved for “each” dwelling unit within the buildings.
• Affordable housing (LIHTC)
• Apartment buildings
• Assisted living facilities
• Production home developments
• Residential condominiums
• Student housing
• Substantial reconstruction or rehabilitation
Each unit must meet a level of energy efficiency that is higher than 2006 IECC standards. Many newer or rehabbed developments already exceed these standards based on recent energy standards and building codes. We recommend that any apartment or condominium project developed (new construction or rehabilitation) within the past four years to be evaluated for the 45L Tax Credit.
You can claim the credit for properties that have been built or remodeled in the past three years.