Energy Star Construction and The §45L Tax Credit

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    What is Energy Star?

    First offered in 1995, The Energy Star New Homes program is a collaboration between the EPA and DOE. Since then, it has certified over 2 million homes. Beginning in 2023, Energy Star certification is required to qualify for the $2,500 per unit 45L tax credit. The program defines standards for energy efficiency, for example high standards for indoor air quality, sound construction and energy efficiency. Only buildings that comply with these standards are able to carry the Energy Star logo.

    Did you know Leyton is an Energy Star Rating Partner?

    At Leyton, we are passionate about sustainability and helping businesses become more energy efficient. That’s why we’re excited to share our alignment with the Energy Star program. This collaboration is a significant step in our ongoing mission to find funding opportunities that help build a more energy efficient world. 

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    Benefits of Energy Star

    • Energy Savings

      Certified homes and apartments use, on average, 35% less energy, resulting in about 10% savings on utility bills. These properties also reduce greenhouse gas emissions, supporting climate change initiatives. As many cities adopt energy performance mandates, obtaining Energy Star certification can help homeowners meet future regulations.

    • Increased Property Value and Higher Occupancy Rates

      According to Energy Star, certified homes typically sell for 8% more than comparable properties. This premium reflects the growing demand for energy-efficient features among buyers.Additionally, these homes tend to have higher occupancy rates, with rents ranging from 3% to 16% above similar properties.

    • Favorable Loan Terms

      Studies show that Energy Star certified buildings have lower default risk in commercial mortgages, resulting in better loan terms and lower interest rates—about 30 to 35 basis points less. This certification not only boosts a property’s appeal but also enhances its financial viability in the real estate market.

    • Regulatory Compliance

      Energy Star certification helps companies comply with energy performance mandates, positioning them favorably for future regulations. Additionally, certified buildings often enjoy increased asset value and higher occupancy rates. By aligning with Energy Star standards, businesses not only improve their sustainability efforts but also gain a competitive edge in the market.

    • Tax and Local Incentives

      Incentives for energy efficiency vary by state, often including cash rebates or reduced electricity rates. In larger cities like Tampa Bay, builders receive a $1,000 rebate for Energy Star-certified homes and a $300 rebate for Energy Star qualifying multifamily units. Additionally, meeting Energy Star standards can expedite permitting, with cities like Denver increasingly aligning building codes with these standards, suggesting that Energy Star may become the primary permitting standard in the future.

    How Leyton Can Help Get You Certified

    Energy Star Rating Partner Expertise
    Leyton is proud to be an Energy Star Rating Partner, highlighting our extensive expertise in the Energy Star Certification process. We work closely with contractors throughout the entire process, ensuring that all critical elements are addressed to prevent any issues that could disqualify clients from the 45L tax incentive program.

    In-house Energy Modeling
    Alongside our consulting services, we provide thorough in-house energy modeling to enhance your project’s energy efficiency. Our team is well-versed in both the technical aspects of Energy Star and the financial considerations, guaranteeing that you make the most of your potential savings and advantages.

    Specialized Tax Knowledge
    When you choose Leyton, you gain a partner committed to reducing risks and boosting your project’s likelihood of success. We aim to simplify the certification process, offer valuable insights, and support you in confidently reaching your energy efficiency goals. Let us guide you through the intricacies of Energy Star Certification and help you realize your project’s full potential!

    Energy Star Home Construction Types

    Single Family New Homes

    While currently on Version 3.1, to be eligible for the $2,500 45L tax credit starting in 2025 builders need to meet Version 3.2. Energy modeling allows for flexibility when meeting the program’s energy saving requirements. However, the prescriptive checklists ensure that materials and equipment are properly installed, with pre-drywall inspections required to verify program requirements are being met. A final test-out inspection assesses air leakage and verifies ventilation for healthy indoor air quality. 

    Multifamily New Construction

    With the passing of the Inflation Reduction Act, multifamily buildings over 3 stories are eligible for the 45L tax credit if they get certified under Multifamily New Construction Version 1.1. Unlike the single-family program there are several pathways to get certified. There are prescriptive, ERI modeling and ASHRAE modeling options giving builders more options to be compliant with the program. There also needs to be a credentialled Functional Testing Agent to verify that HVAC was properly installed, in addition to the Energy Star Rater inspections. 


    Energy Modeling at Leyton




    Looking for a tax consultancy that handles energy modeling in-house? Leyton is here to save time and maximize your tax savings with our expert in-house energy modeling services. Trust us to streamline the process and deliver results.

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