To obtain the valuable $2000 per unit energy tax credit under Code Section 45L, developers often ask us what are the key factors used in the modeling software to determine whether their buildings qualify under Section 45L for the credit. The software calculates whether the new residential building is at least 50% more energy efficient than the 2006 International Energy Conservation Code (IECC); more specifically, the new building’s heating and cooling consumption must be certified to be at least 50% lower than a comparable building constructed under the 2006 energy standards, and the new building must have building envelope component improvements that provide at least 10% reduction in energy consumption again compared to the 2006 standards.
As to the key factors for developers to qualify for the 45L tax credit, although the software modeling is fairly complex and relies upon many factors, some of the key drivers for the 45L energy tax credit are:
- Insulation R-Factors
- SEER rating of AC system
- Window U-Factors
- Climate Zone
All but the last factor can be modified by developers as they develop their projects, so we regularly advise our clients on building components in order for current construction to qualify (assuming the 45L credit gets extended this year).
Please call us if we can assist in your current project plans or have existing projects that may qualify. Remember the certification process is mandatory in that your 45L energy tax credits must be certified by a qualified engineer using DOE approved software.