24 January 2020 Year-end tax legislation extends energy efficient home credit to end of 2020 Tax legislation enacted at the end of 2019 included the Further Consolidated Appropriations Act, 2020 (H.R. 1865, the Act), which extended the Energy Efficient Home Credit under IRC Section 45L to December 31, 2020. The credit had expired on December 31, 2017. The extension of the credit is retroactive, so taxpayers may claim the credit for homes sold in 2018 by filing an amended return. The Act made no other changes to IRC Section 45L. Under IRC Section 45L, an eligible contractor can claim a credit up to $2,000 per qualified new energy efficient home. Manufactured homes can receive a credit up to $1,000. In either case, an eligible certifier must certify in writing that the dwelling unit meet certain energy- efficient standards. The energy-savings requirements have not been updated, and IRC Section 45L refers to the 2006 International Energy Conservation Code (IECC). With many builders conforming to the newer IECC 2015 and 2018 codes, we expect more current construction to qualify. The credit remains a general business credit governed by IRC Section 38. Credits can be carried back one year and carried forward 20 years. With the repeal of corporate AMT tax, taxpayers will be able to better monetize these credits on their returns. This is a welcome development for the homebuilder community. Homebuilders should consider engaging an eligible rater for a lookback review, amending their 2018 tax returns if credits are available, and reviewing their eligibility for the 2019 credits.
Document ID: 2020-0180 | |||||||||
