Builders Incentive
New Homes
Note: This credit expired at the end of 2009. Several legislative proposals exist to extend it or to create a comparable new credit, but the credit described below is not presently available for homes built in 2010. Builders of homes completed in 2009, however, may still claim the credit on their 2009 taxes.
What is the tax credit for new homes?
A credit of $2000 is available to home builders who build homes (including both site-built and manufactured homes) projected to save at least 50% of the heating and cooling energy of a comparable home that meets the standards of the 2004 International Energy Conservation Code (the 2003 code including the 2004 supplement). A $1000 credit is available to manufactured home producers for models that save 30% or that qualify for the federal Energy Star Homes program.
These credits are available for buildings or systems placed in service from January 1, 2006, through December 31, 2009.
Read an IRS summary of the credit here.
*Update: RESNET has completed a survey of rating providers regarding the number of homes that their raters certified for the federal tax credit (2007 only). 23,702 homes were certified by RESNET during 2007, which is triple the number of homes certified in 2006. For more information, click here.
Who is eligible for the federal tax credit?
These credits go to the builder or producer of the home.
What are the incentives and how do they work?
- Credits are available for homes placed in service (i.e. ready and available for use) from January 1, 2006 through December 31, 2009.
- Site-built homes: Builders can take a credit of $2000 per home, in the year that that the home is sold. The home must be certified to use at least 50% less energy than a comparable home that complies with the standards provided in the 2003 IECC, including 2004 supplement, and uses a SEER 13 air conditioner. Building envelope improvements must account for at least 1/5 of the 50% energy savings.
- Manufactured homes: Producers can take a credit of $2000 per home, in the year that that the home is sold, for meeting the 50% savings criterion. Alternately, they can claim a credit of $1000 for each home that is certified to save 30% or that qualifies for the U.S. EPA Energy Star Homes program.
What goes into a high-efficiency new home?
Homes can qualify for these credits using a wide range of energy efficiency measures. These can include better-insulated foundations, walls, and ceilings; high-efficiency windows; well-sealed framing and air ducts; high-efficiency heating and cooling systems; and other innovative design and construction methods.
What must I do to qualify for the incentive?
- Site-built homes:
- DOE is now preparing guidelines on suggested design and construction techniques for reaching the 50% savings threshold. These should be available soon at U.S. Department of Energy website.
- A presentation at the January 2006 International Builder's Show (270 KB PDF) identifies possible packages for different climate zones.
- IRS guidance specifies that builders obtain certification that a new home qualifies from an independent certifier accredited by the Residential Energy Service Network or an equivalent program. Details can be found on the IRS website.
- EnergyGuage software helps determine compliance.
- Manufactured homes:
- Consult the U.S. EPA website.
- IRS guidance specifies that manufacturers obtain certification that a new home qualifies from an independent certifier accredited with the Residential Energy Service Network or an equivalent program. Details can be found on the IRS website.
Click here to access IRS guidance on qualifying new homes.
Where can I find out more about qualifying homes?
- Site-built homes: www.eere.energy.gov/buildings/building_america
- Manufacturered homes: Energy Star
- Accredited Rating Providers from Residential Energy Services Network (RESNET)
- RESNET: www.natresnet.org
- RESNET Presentation: Procedures for Certifying Residential Energy Efficiency Tax Credits for New Homes (114 KB PDF) *This does not represent any official government or TIAP member positions.
- RESNET Presentation: The New Homes Credit (858 KB PDF)
- IRS Bulletins & Information
