IR-2023-180, Sept. 27, 2023
WASHINGTON — The Internal Revenue Service issued Notice 2023-65 today which provides guidance on the new energy efficient home credit as amended by the Inflation Reduction Act (IRA).
The provision, as amended by the IRA, allows eligible contractors who construct or substantially reconstruct and rehabilitate qualified new energy efficient homes a tax credit of up to $5,000 per home. The actual amount of the credit depends on eligibility requirements such as the type of home, the home's energy efficiency, and with respect to multifamily dwelling units, whether prevailing wage requirements are met.
Individuals or entities looking to claim the credit should consult with a tax professional to determine whether and how they can claim the credit and determine whether the credit can be used with other tax incentives or Federal incentives.
To qualify, eligible contractors must construct or substantially reconstruct and rehabilitate a qualified new energy efficient home located in the United States. They also must own the home and have a basis in it during the construction, and they must sell or lease the home to a person for use as a residence.
Homes must be eligible to participate in certain Energy Star programs and meet applicable energy saving requirements based on home type.
For homes acquired in 2023 through 2032, the credit amount ranges from $500 to $5,000, depending on the certification achieved and standards met, which include:
The energy saving requirements incorporate certain Energy Star program requirements and certain Zero Energy Ready Home program requirements. For homes acquired in 2023 and after, refer to the tables on the Energy Star website for the minimum Energy Star program versions eligible under section 45L. For more information on the relevant Zero Energy Ready Home program in effect, refer to the Department of Energy DOE Zero Energy Ready Home (ZERH) Program Requirements.
For homes acquired before 2023, the credit amount is $1,000 or $2,000, depending on the standards met, which include: