Energy-Efficient New Homes Tax Credit for Home Builders
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$1,000 - $2,000 (depends on energy savings and home type)
Note: The Bipartisan Budget Act of 2018 reinstated this credit for home constructed in 2017. Any qualified homes constructed prior to January 1, 2018 are eligible for this credit. Homes constructed on or after January 1, 2018 are not eligible for this credit.
The federal Energy Policy Act of 2005 established tax credits of up to $2,000 for builders of all new energy-efficient homes, including manufactured homes constructed in accordance with the Federal Manufactured Homes Construction and Safety Standards. Initially scheduled to expire at the end of 2007, the tax credit was extended several times, and expired at the end of 2017.
The home qualifies for the credit if:
- It is located in the United States;
- Its construction is substantially completed before December 31, 2017;
- It meets the energy saving requirements outlined in the statute; and
- It is acquired from the eligible contractor after December 31, 2013, and before January 1, 2018, for use as a residence.
Energy Saving Requirements
Site-built homes qualify for a $2,000 credit if they are certified to reduce heating and cooling energy consumption by 50% relative to the International Energy Conservation Code (IECC) 2006 and meet minimum efficiency standards established by the Department of Energy. Building envelope component improvements must account for at least one-fifth of the reduction in energy consumption.
Manufactured homes qualify for a $2,000 credit if they conform to Federal Manufactured Home Construction and Safety Standards and meet the energy savings requirements of site-built homes described above. Manufactured homes qualify for a $1,000 credit if they conform to Federal Manufactured Home Construction and Safety Standards and reduce energy consumption by 30% relative to IECC 2006. In this case, building envelope component improvements must account for at least one-third of the reduction in energy consumption. Alternatively, manufactured homes can also qualify for a $1,000 credit if they meet ENERGY STAR Labeled Home requirements.
The Internal Revenue Service (IRS) has issued guidance to provide information about the certification process that a builder must complete to qualify for the credit. The guidance also provides for a public list of software programs that may be used in calculating energy consumption for purposes of obtaining a certification.
IRS Notice 2006-27 provides guidance for the credit for building energy-efficient homes other than manufactured homes. IRS Notice 2006-28 provides guidance for the credit for building energy-efficient manufactured homes. Click here to access IRS Form 8908: Energy Efficient Home Credit.
For more information on this and other energy efficiency tax credits, visit the ENERGY STAR web site.
The federal Energy Policy Act of 2005 first established this tax credit. Initially scheduled to expire at the end of 2007, it was extended through 2008 by Section 205 of the Tax Relief and Health Care Act of 2006 (H.R. 6111), and then extended again through December 31, 2009 by Section 304 of The Energy Improvement and Extension Act of 2008 (H.R. 1424). The Tax Relief, Unemployment Insurance Reauthorization, and job Creation Act of 2010 (H.R 4853) again renewed the credit through December 31, 2011. After expiring at the end of 2011, the American Taxpayer Relief Act of 2012 retroactively renewed the cedit effective January 1, 2012, expiring again on December 31, 2013. The bill was again rectroactively renewed by the the Tax Increase Prevention Act of 2014 (H.R. 5771) to December 31, 2014.