The Inflation Reduction Act of 2022 (IRA) amended Internal Revenue Code Section 45L to provide taxpayers with a tax credit for eligible new or substantially reconstructed homes that meet applicable ENERGY STAR home program or DOE Zero Energy Ready Home (ZERH) program requirements. The new 45L provisions include two tiers of credits, with the higher credits for eligible homes and dwelling units certified to applicable ZERH program requirements. These new 45L rules apply to qualified energy efficient homes acquired after December 31, 2022, and before January 1, 2033, for use as a residence during the taxable year.
The 45L credit is $500 per apartment for dwelling units that are part of a building eligible to participate in the ENERGY STAR Multifamily New Construction Program, and $1000 per apartment for dwelling units that are part of a building eligible to participate in the Zero Energy Ready Homes Program. There is a 5X multiplier to the 45L tax credit value if the project is constructed with prevailing wage.