Question 1

Recordkeeping: what does IRA Section 45L New Energy Efficient Home Credit require?

Accepted Answer

Maintain permanent records (books, accounts, invoices, payroll, certification documents) sufficient to substantiate all Section 45L tax credit eligibility requirements and credit amounts claimed. Deadline: Records must be retained and available for IRS examination indefinitely or as long as contents may become material to administration of tax law. Disallowed-cost risk: Failure to maintain substantiating records results in IRS audit denial of claimed credit; credit disallowance and tax liability increase plus penalties.

Question 2

Reporting: what does IRA Section 45L New Energy Efficient Home Credit require?

Accepted Answer

File IRS Form 8908 (Energy Efficient Home Credit) with your tax return for the taxable year in which the home was acquired; for multifamily homes claiming prevailing wage premium, complete and attach Form 7220 (Prevailing Wage and Apprenticeship Verification). Deadline: Form 8908 filed with income tax return for taxable year of home acquisition; Form 7220 attached if claiming increased multifamily credit (line 3b or 4b). Disallowed-cost risk: Failure to file Form 8908 or Form 7220 results in inability to claim credit; retroactive filing allowed only within open tax years.

Question 3

Financial & Cost Eligibility: what does IRA Section 45L New Energy Efficient Home Credit require?

Accepted Answer

For multifamily dwellings claiming the $5,000 credit (vs. $2,500 or $500), ensure all laborers and mechanics on the project are paid prevailing wages as determined by the Department of Labor; maintain payroll records documenting hours worked in each classification and actual wages paid. Deadline: Compliance required during construction; payroll records must be maintained and available for verification when claiming credit. Disallowed-cost risk: Failure to meet prevailing wage requirements results in credit reduction from $5,000 to $2,500 or $500 per unit; credit denial if falsely claimed; penalties apply per IRC § 45(b)(7)(B) rules.

Question 4

Ongoing Eligibility: what does IRA Section 45L New Energy Efficient Home Credit require?

Accepted Answer

Obtain third-party ENERGY STAR or DOE Efficient New Homes (ZERH) certification prior to selling or leasing the home; certification must be prepared by a certified rater (for single-family) or qualified certifier per program requirements, and must use an approved energy modeling software. Deadline: Certification must be completed and submitted to certification organization before home is acquired (sold or leased) for credit to be claimed in that taxable year. Disallowed-cost risk: Absence of valid ENERGY STAR or ZERH certification disallows entire credit for that home; no credit available regardless of home's actual efficiency.

Question 5

Ongoing Eligibility: what does IRA Section 45L New Energy Efficient Home Credit require?

Accepted Answer

Ensure the eligible contractor (the taxpayer/owner who constructed or hired construction and sold/leased the home) meets all Section 45L eligibility requirements, including ownership and tax basis in the home during construction and sale/lease to an unrelated third party for residential use. Deadline: Ownership and basis requirements must exist at time home is constructed and acquired by buyer/lessee in the applicable taxable year. Disallowed-cost risk: If contractor did not own or did not have basis in home during construction, or sold to ineligible party, entire credit is disallowed; credit clawback if erroneously claimed.

Question 6

Environmental: what does IRA Section 45L New Energy Efficient Home Credit require?

Accepted Answer

Home must be acquired (sold or leased) by the buyer/lessee on or before June 30, 2026; homes acquired after that date are ineligible for the 45L credit. Deadline: Home acquisition date must be on or before June 30, 2026 to be eligible. Disallowed-cost risk: Homes acquired after June 30, 2026 generate zero credit; credit claimed on such homes is fully disallowed and subject to audit penalties.

Question 7

Reporting: what does IRA Section 45L New Energy Efficient Home Credit require?

Accepted Answer

Provide to the IRS, on Form 8908 Part III, the street address of the first 20 homes for which the 45L credit is being claimed (updated requirement per Dec. 2025 instructions). Deadline: Complete on Form 8908 filed with tax return for taxable year in which homes are acquired. Disallowed-cost risk: Missing or incomplete address information may result in IRS examination and potential credit disallowance for affected homes if contractor cannot verify which homes are claimed.

Question 8

Financial & Cost Eligibility: what does IRA Section 45L New Energy Efficient Home Credit require?

Accepted Answer

Reduce the adjusted basis of each home by the amount of the 45L credit claimed; exception: do not reduce adjusted basis for purposes of the Low-Income Housing Tax Credit (LIHTC) calculation. Deadline: Basis adjustment must be made when computing depreciation and gain/loss on sale; calculated at time credit is claimed. Disallowed-cost risk: Failure to adjust basis results in over-depreciation and understated taxable gain on sale; IRS audit can assess deficiency and penalties for incorrect basis calculation.

IRA Section 45L New Energy Efficient Home Credit: Compliance Requirements

⚠ Common Disallowed-Cost Pitfalls

Reporting

Financial & Cost Eligibility

Environmental

Recordkeeping

Ongoing Eligibility

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