Section 45L New Residential Energy Tax Credit 2027

What is the Section 45L energy credit?

Section 45L — the New Energy Efficient Home Credit — is a federal tax credit for builders, developers, and contractors who construct qualifying new energy-efficient single-family or multifamily homes. It was created by the Energy Policy Act of 2005 and substantially expanded by the Inflation Reduction Act of 2022, which raised the credit and extended it through 2032. The credit is claimed by the eligible contractor — the person who constructs and sells/leases the home, not the buyer.

In 2027, single-family homes meeting ENERGY STAR Single Family New Homes standards qualify for a $2,500 credit per home. Homes meeting the higher DOE Zero Energy Ready Home (ZERH) standard qualify for $5,000. Multifamily units (3+ stories or 4+ units) qualify for $500 (ENERGY STAR) or $1,000 (ZERH) per unit — but with prevailing wage compliance, those rates increase 5× to $2,500 / $5,000 per unit.

How 45L stacks for multifamily developers

For a 100-unit ENERGY STAR multifamily project with prevailing wage compliance, the 45L credit is $2,500 × 100 = $250,000. With ZERH certification it doubles to $500,000. This is a direct credit against tax liability — far more valuable than a deduction. The credit can also offset AMT and is not limited by passive activity rules for builders treating construction as a trade or business.

To claim 45L, the home must be certified by an independent third-party rater accredited by RESNET (Residential Energy Services Network) or PHIUS. The rater issues a HERS rating and ENERGY STAR / ZERH certification. Certification cost is typically $200–$500 per single-family home or $50–$200 per multifamily unit at scale. The credit is claimed on Form 8908 in the year the home is sold or leased.

How to maximize the 45L credit on your project

Three strategies maximize 45L: (1) target ZERH instead of just ENERGY STAR — the credit doubles for relatively modest extra cost, especially when geothermal, solar, or heat pumps are already specified; (2) ensure prevailing wage compliance from day one on multifamily — retroactive cure is expensive; (3) batch certification — getting a single rater to certify an entire subdivision at once cuts per-unit cost dramatically.

If you sell unfinished units to another developer who completes them, only the final builder claims the credit. If you build then rent, you claim in the year of first lease. Don't forget to amend prior returns if you missed claiming on previously sold homes — the credit can be claimed retroactively up to three tax years back.

Sources: IRS Form 8908 (Energy Efficient Home Credit), IRC §45L + Inflation Reduction Act 2022, NAR.realtor builder advocacy, US DOE Zero Energy Ready Home Program, BiggerPockets builder tax guides. Last updated: May 2026.