45L Tax Credit Certificate:
Are you interested in a $2,500 tax credit for your energy-efficient property? That’s right, builders with efficient upgrades may qualify for up to $2,500 per dwelling unit. Therefore, developers in California should be aware that some of their projects may qualify for this credit. This is vital information in the hands of owners and developers undergoing construction projects.
What is the Role of the HERS Index?
RESNET created the HERS Index, a national scoring system for rating the efficiency of homes. HERS Raters, like us, certify homes on a scale of 1-150. 0 equates to zero-net energy consumption while 150 would be extremely inefficient. Clean your ears out, you heard that right! ZNE is not a concept only heard in sci-fi novels, anymore.
The California Energy Commission is the governing body that adopted these national rating standards as a tool for property owners. Section 45L of the Inflation Reduction Act has accredited many new and altered residences for exceeding minimum efficiency requirements. Stipulations from the IRS are as follows:
- Upgrades completed before 2023 – The homeowner must hire a licensed field inspector to verify the efficiency rating is below half of the energy consumption of comparable dwelling units from 2006. Depending on the climate zone, that would mean attaining a score of around 40 out of 150 on the HERS Index. At least 1/5 of efficiency improvements must be as a result of envelope features, such as insulation or fenestrations. $100 goes directly to the Provider for registration and homeowners/developers may receive a $2,000 tax credit.
- Upgrades completed from January 1st, 2023 until January 1st, 2033 – A licensed HERS Rater must certify your project through an approved Energy Star Program to earn the $2,500 credit. Alternatively, another $2,500 credit can be applied for properties that are Zero Energy “Ready” according to the US Department of Energy’s standards. Developers may receive a $5,000 tax credit per dwelling unit, as a result.
How Can You Apply?
Only Providers are capable of issuing the certification, with the field verification portion completed by the HERS Rater. In order to apply for the credit, you must submit Form 8908 to the IRS.
Currently, the only provider that offers the 45L tax credit and ZERH (Zero Energy Ready Home) certification is CHEERS. CHEERS automatically checks for 45L eligibility, making it easy for us to verify. So, why choose BarrierEnergy as your HERS Rater? Requirements from Energy Star will update on a yearly basis, making it difficult to keep up. Accordingly, we walk our clients through the entire process by rating the house and signing off on 45L certificates.