The Inflation Reduction Act (IRA) drastically changed the 45L Energy Efficient Home Credit (Section 45L) and the Section 179D Energy Efficient Commercial Buildings Deduction (Section 179D) quantities and requirements, thus allowing more opportunities for home builders and multi-family developers constructing energy-efficient homes to earn money back. As a result of the major changes in the Section 45L tax credit, there are new qualifications that businesses must meet to benefit from the energy tax opportunities.

In this episode of the Real Estate and Construction Podcast, Mark Cooter, Real Estate, Construction & Hospitality Industry Practice Leader, and Ron Wainwright, Energy Tax Credits & Incentives Leader, discuss how the real estate and construction industry can best utilize the Section 45L tax credit.

This conversation includes:

• Background on Section 45L
• Advantages from Section 45L for real estate and construction companies
• Requirements to qualify
• Examples of successfully utilizing Section 45L

Related Guidance

• Take Advantage of New Section 45L Tax Credit Opportunities Under IRA
• What the Inflation Reduction Act Means for the 45L Energy Efficient Home Credit
• Understanding the Expanded Benefits of Energy Tax Incentives Under 179D and 45L
• How the Real Estate and Construction Industry Benefits from the Inflation Reduction Act of 2022

On January 29, 2023, new requirements for prevailing wage and apprenticeship, as outlined in the Inflation Reduction Act of 2022 (IRA), went into effect. These requirements aim to create good paying jobs in the clean energy space by offering enhanced tax credits to participating taxpayers.

The IRA is critical in providing good paying jobs through offering enhanced tax benefits for a range of clean energy and green energy projects to taxpayers. The Davis-Bacon Act ensures prevailing wages are paid to workers on such projects and that registered apprentices are utilized, in accordance with the IRA.

By pairing climate investment with creating good paying jobs, the IRA’s unparalleled investments to fight the climate crisis will help improve job quality in clean energy industries and incentivize the expansion of related workforce training pathways.

Taxpayers that wish to take advantage of enhanced clean energy tax benefits must establish that all laborers and mechanics are paid the applicable prevailing wage, including fringe benefits, for all hours performing construction, and in some cases alteration or repair, on the site of a qualified facility.

Mark Cooter, Real Estate & Construction Leader, welcomes Ron Wainwright, Tax Credits & Incentives Advisory Partner, on Cherry Bekaert’s Real Estate and Construction podcast to learn more about prevailing wage and apprenticeship requirements.

On this podcast the team will unpack the background of the IRA and answer the following questions:

• What is a prevailing wage and how do you comply with it?
• How do the prevailing wage and apprenticeship requirements impact real estate and construction firms?
• When do prevailing wages need to be paid to qualify?
• To what types of facilities do prevailing wage and apprenticeship requirements apply?

The Inflation Reduction Act (IRA) was signed into law in August 2022 and creates huge tax credit incentive savings for real estate and construction groups that prioritize clean energy. One tax provision of the IRA was the 45L Energy Efficient Home Credit.

Mark Cooter, Cherry Bekaert’s Real Estate and Construction Practice Leader, invites Ron Wainwright, Strategic Tax Partner and Leader of the Firm’s Energy Tax Credits & Incentives Practice within the Tax Credits and Incentives Advisory group, and Bill Harbeson, a manager at Cherry Bekaert, will discuss how 45L has changed with the IRA and how.

The Podcast Covers:

• What is 45L?
• What is changing with 45L in 2023?
• How do 179D, Cost Segregation, and 45L interact?
• How can Cherry Bekaert help before construction begins?

Related Thought Leadership:

• How the Real Estate and Construction Industry Benefits from the Inflation Reduction Act of 2022
• Inflation Reduction Act of 2022: Key Income Tax Provisions
• Inflation Reduction Act of 2022: Details & Tax Changes