15 Nov Discover 45L Tax Credit for Build to Rent Single-Family Homes
The Inflation Reduction Act (IRA) has brought major benefits for developers of energy-efficient homes, especially in the Build to Rent (BTR) single-family sector. One of the key incentives is the expanded 45L tax credit program, offering substantial federal tax credits for energy-efficient new homes.
This is a golden opportunity for Build to Rent (BTR) developments looking to integrate sustainability into their projects while reducing costs.
Continue reading to understand the 45L Tax Credit for BTR single family homes.
What is the 45L tax credit?
The 45L tax credit provides $2,500 per house for projects achieving ENERGY STAR certification, and $5,000 per house for homes certified under the Zero Energy Ready Homes (ZERH) program. These certifications may seem challenging to meet, but with careful planning and design, they can be achieved cost-effectively. Early integration of energy efficiency strategies into project designs is key to avoiding costly last-minute adjustments.
ENERGY STAR certification requirements
ENERGY STAR certification is a great starting point for developers seeking the $2,500 tax credit.
Key requirements include:
- Advanced framing, such as insulated corners, T-walls, and exterior headers, or continuous insulation installed on all exterior walls.
- Grade 1 insulation or Grade 2 with additional exterior insulation.
- Registration of builders and HVAC contractors as ENERGY STAR partners and certified installers.
- Proper ventilation installation meeting ASHRAE 62.2.2010 standard.
In addition, homes must achieve a Home Energy Rating System (HERS) index that meets or exceeds the program’s target. This can often be accomplished through strategies like placing HVAC systems and ducts within conditioned spaces, and simplifying home designs to reduce energy waste and costs.
Zero energy ready homes (zERH) for maximum credits
For developers aiming for the full $5,000 per house tax credit, the Zero Energy Ready Homes (ZERH) certification is the next level. In addition to meeting ENERGY STAR requirements, ZERH requires:
- Efficient hot water systems designed to minimize waste.
- MERV 8 filters for HVAC systems and ventilation.
- Future-proofing homes for solar panel installation.
- Adherence to indoor airPLUS certification for healthier indoor environments.
Achieving ZERH certification requires a HERS index 20% better than ENERGY STAR, which typically means upgrading insulation, windows, and ventilation systems.
Certifying your Build to rent community
The path to certification involves thorough inspections and testing. This streamlines the process while ensuring that the entire community meets the standards for certification.
SK Collaborative is a leader in guiding projects through the certification process, ensuring projects meet all requirements on time and on budget. With extensive experience in green building and healthy housing certifications, our team is here to help you unlock the full potential of the 45L tax credit for your Build to Rent projects.
Why Choose sK Collaborative?
When it comes to maximizing the benefits of the 45L tax credit, partnering with experienced professionals is essential. SK Collaborative’s award-winning team is dedicated to making sustainable building certification easy and efficient. Let us help you take full advantage of this valuable incentive while delivering energy-efficient, healthy homes to your renters.
Learn more from our fact sheet
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