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45L Federal Tax Credit and Cost Segregation - Useful Tax Savings Strategies

Maintaining a residential property can be quite expensive. More and more investors are waking up to the significant benefits offered by tax savings tools and tax credits. These can help them reduce the money that they spend for tax payments, and thus increase their profit. Whether you are an owner, builder or a contractor, 45L Tax Credit and Cost Segregation are two tax savings strategies that can immensely benefit you.
45L Federal Tax Credit

45L Tax Credit

The 45L FederalTax Credit, which is also referred to as the New Energy Efficient Home Tax Credit, is listed under the Internal Revenue Code (IRC) in Section 45L. This tax credit can provide you with a credit for every energy efficient dwelling unit that has been built after August 8, 2005 and qualifies for the tax credit. Developers, apartment owners and contractors can avail the 45L Tax Credit for both current and earlier projects and can benefit from the advantages. 

The 45L Federal Tax Credit can apply to various types of buildings, which include:

  • Student Housing
  • Production Homes
  • Residential Condominiums
  • Affordable Housing
  • Apartment Complexes
  • Senior Living/Assisted Living Facilities

What is Costs Segregation?

It refers to a tax savings tool which can let individuals and companies who have bought, built, expanded or renovated any real estate property to increase their money by deferring state and federal income taxes or by speeding up depreciation deductions.

Cost Segregation

The Study mainly aims to detect all costs associated with construction which can be deprecated over a period of 5-15 years. The main benefits of this study are:

  • It leads to an instant increase in the flow of money by accelerating depreciation deductions.
  • It lowers real estate property taxes as well as income taxes.
  • It allows an easy chance to get ‘catch up’ depreciation on assets that have been misclassified earlier.
  • It allows a third-party, independent analysis that can withstand a review by IRS.
State and federal governments offer these types of tax Incentives to promote safe construction, create more jobs, stimulate energy efficiency and add to the development of economy. As an owner, contractor or a builder, you can find these tax saving strategies quite useful to increase cash flow. 


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