National Incentives for Energy Efficiency & Green Building

Discover the incentive options readily available to building developers & owners. ReVireo can help you navigate these opportunities to find the best incentives suited to your building type and business.

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tax benefits

Section 45L Tax Credit

for Energy Efficient Homes

Section 45L is a federal tax credit for the development and sale/lease of energy efficient residential dwelling units, including single-family homes, townhomes, and apartments.

The Inflation Reduction Act of 2022 recently extended the Section 45L tax credit through the end of 2032 and increased the amounts available to developers.

For dwelling units sold or leased as of January 1, 2023, the Section 45L federal tax credit requirements and amounts are:

Single-Family Dwelling Units (including traditional side-by-side townhomes and duplexes)

Multifamily Dwelling Units (including stacked townhomes and apartment buildings of all sizes)

While it may not always be cost-effective for every new dwelling unit to qualify, developers can leverage local utility company energy efficiency rebate programs to offset costs to qualify for the Section 45L tax credit. This is because the requirements for the Section 45L tax credit overlap with the requirements of many local utility rebate programs. By earning ENERGY STAR and/or DOE ZERH certification, developers can earn both the tax credit and receive rebates.

Developers of apartment buildings over three stories may be able to leverage the Section 179D tax deduction to offset costs to qualify for the Section 45L tax credit. Such developers can deduct the cost of energy efficient equipment and materials used to earn ENERGY STAR and/or DOE ZERH certifications and qualify dwelling units in those buildings for the Section 45L tax credit.

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The information below is currently outdated and will be updated. The Inflation Reduction Act of 2022 significantly increased the Section 179D Tax Deduction benefits.
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tax benefits

Section 179D Tax Deduction

for Energy Efficient Buildings

Section179D is a $0.60 - $1.80 per square foot tax deduction for building owners that have installed energy efficient equipment in either new or existing buildings. The tax deduction is applicable to all commercial buildings as well as to apartment buildings that are four stories or more.

The tax deduction is available for demonstrating energy savings from energy efficient technologies in three categories - Envelope, HVAC and Hot Water, and Lighting. Projects can qualify for the full $1.80 sq. ft. by meeting the savings target for each category. Alternatively, projects can earn $0.60 sq. ft. for each category for which it meets the savings target. Additionally, the “interim lighting rule” provides an alternative and streamlined approach for demonstrating savings from lighting.

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While it may not always be cost-effective for every building to qualify, there are opportunities to leverage local utility company energy efficiency rebate programs to offset costs to qualify.

This is because:

  • The efficiency requirements for the tax deduction almost always exceed the minimum efficiency requirements of local utility rebate programs.
  • The local utility rebate programs almost always use the same energy modeling software and inspections used for tax deduction.
PREFERENTIAL FINANCING

Incentive Programs

for Multi-family Buildings

Fannie Mae, Freddie Mac, and HUD each have programs incentivizing green building and energy efficiency for new or existing multi-family buildings. The programs offer reductions in annual interest rates or mortgage insurance premiums of up to 0.35%. Projects can qualify for these discounts by completing a recognized green building certification.

Certifications can be earned during or after construction. Not all certifications are as difficult to achieve as others, and some are very easy and inexpensive to implement. In some instances, buildings can earn a recognized certification after construction by simply benchmarking energy usage.

Separately, Fannie Mae and Freddie Mac also provide better pricing and more funds for existing buildings without a recognized certification that commit to energy efficiency and water efficiency upgrades.

ReVireo offers comprehensive services for all of your business needs.

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Plan Review, Energy Modeling Analysis, & Consulting

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Inspection, Testing, Verification, & Certification

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Incentive Management & Supporting Documentation

Energy Efficient & Green Building Projects

Many of our clients have benefitted from national tax benefits and preferential financing. Let ReVireo help you find the best incentives suited to your building type and business.

The Majestic at Watkins Mills & Paramount East/West

Client

HIP Projects, LLC

Location

Gaithersburg, Maryland
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FLOW Chelsea

Client

Bernstein Real Estate

Location

Manhattan, New York City
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Toll Brothers Tri-State Area

Client

Toll Brothers

Building Type

Single Family, Townhomes

Location

New Jersey, New York, Connecticut
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