Overview: Federal Tax Incentives for Energy-Efficient Properties
Date:  February 7, 2013

Beginning with the enactment of the National Energy Policy Act of 2005, Congress has provided several energy tax incentives of interest to multifamily firms.  Although the original set of incentives were originally set to expire on December 31, 2008, subsequent congressional action has extended and, in some cases, expanded their availability.

This guidance document details the three main incentives of interest to apartment firms and offers additional resources for firms interested in taking advantage of these incentives. Additional information is also available on NMHC's web site at www.nmhc.org/goto/GreenPractices. 

  1. The Energy Efficient Commercial Buildings Tax Deduction (IRC Section 179D): A $1.80 per square foot tax deduction for properties that exceed the efficiency standards set out in the American Society of Heating, Refrigerating and Air-Conditioning Engineers (ASHRAE) Standard 90.1 by 50 percent. This deduction is available through 2013.

  2. An Energy Investment Tax Credit (IRC Section 48): A tax credit is available to offset up to 30 percent of the cost for the purchase of qualifying solar energy systems, combined heat and power systems, small wind energy systems, geothermal heat pumps, fuel cells and microturbine systems.  This credit is available through 2016.

  3. A New Energy Efficient Homes Tax Credit (IRC Section 45L): Finally, some low-rise multifamily properties (three stories or less) may qualify for a $2,000 per unit tax credit for new residences that achieve a 50 percent energy savings for heating and cooling over the 2004 International Energy Conservation Code (IECC) and supplements. This deduction is available through 2013.

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THIRD-PARTY RESOURCES