Home Builders: The §45L Energy Efficient Home Credit Expires June 30, 2026

Tax credits beat deductions every time. A $5,000 deduction at a 37% rate saves you $1,850. A $5,000 credit saves you $5,000 — dollar for dollar off your tax bill. That's why the IRC §45L energy efficient home builder credit deserves your attention, especially if you're in the residential construction space.

But here's the catch: the OBBBA set a hard expiration. Homes must be acquired by June 30, 2026. That's roughly four months from now.

How the Credit Works

You're eligible if your business constructs or substantially reconstructs a qualified energy efficient home, and you own it (have tax basis) during the construction period. The home must be purchased or leased by an individual for use as a residence by June 30, 2026.

A quick clarification: if you own the home during construction and hire a sub to build it, you claim the credit, not the sub. The credit follows ownership and basis, not who swings the hammer.

Credit Amounts

Single-family and manufactured homes:

• Meets Energy Star program requirements: $2,500
• Also certified as Zero Energy Ready Home (ZERH): $5,000

Multifamily homes (per qualifying unit):

• Meets Energy Star: $500/unit (or $2,500 with prevailing wage)
• Also certified ZERH: $1,000/unit (or $5,000 with prevailing wage)

For multifamily builders paying prevailing wages, the credit jumps five-fold. If you're already meeting prevailing wage requirements for other reasons, this is found money.

What Counts as "Acquired"

Acquired means purchased or leased. Rental units count — the tenant is the individual "acquiring" the home for residential use. But you can't claim the credit if you build a home and keep it as your own residence. It must go to a third party.

The Paperwork

Claim the credit on IRS Form 8908. It flows through the general business credit on Form 3800. If you're operating through a partnership, LLC, or S-corp, the entity files Form 8908 and the credit passes through to you on Schedule K-1.

You need Energy Star or ZERH certification for each qualifying unit. Retain records of the home address, proof you're the eligible builder, the buyer or tenant's name, and the acquisition date. If you're claiming the prevailing wage bump, keep documentation of wage compliance.

One thing to know: claiming the credit reduces your tax basis in the home by the credit amount. It's not entirely free — but a $5,000 basis reduction is a small price for a $5,000 dollar-for-dollar tax credit.

The Clock Is Ticking

June 30, 2026 is a hard stop. Not "substantially complete" — acquired. The buyer must close or the tenant must sign a lease by that date. If you have energy efficient homes in the pipeline, accelerate the sales process. If you're building spec homes, get them listed and under contract now.

A $5,000 tax credit per home, times 10 homes, is $50,000 off your tax bill. That's worth a phone call to your tax advisor today, not in May.

The Bottom Line

The §45L credit is one of the most valuable per-unit tax benefits available to residential builders and developers. But the window closes June 30, 2026, and it's not coming back. If you have qualifying homes in the pipeline, make sure they're acquired before that deadline — and make sure you have the certifications and documentation to claim every dollar.