Resources

1. Does “privately owned” include entities that own HUD subsidized properties? Would "privately owned" include properties owned by a nonprofit?

Yes. Generally, any owner of HUD-assisted multifamily buildings, including for-profits, housing agencies, and nonprofits, is eligible for GRRP funding. Importantly, this does not include public housing. Details of eligible programs are in the Notices of Funding Opportunity (NOFOs).

2. Would “households” include renters or only owners?

Renters are not eligible, but owners of rental properties are eligible. GRRP is for owners of HUD-assisted multifamily housing. For further eligibility and application details, refer to the HUD NOFOs released on May 11^th, 2023.

3. Who can access the benchmarking funds and what are they used for?

GRRP applicants in all three cohorts may apply to HUD for direct support or reimbursement of benchmarking costs (up to $2,500 per property). Some GRRP award winners will be required by HUD to submit pre- and post-construction benchmarking data, while others will be required only to submit post-construction benchmarking data. The funding is to collect and input the necessary data.

4. Are mobile homes also included?

No. GRRP is intended to serve HUD-assisted multifamily properties. (See HUD’s webpage for additional details).

5. Does receiving a tax credit preclude an owner from getting rebates?

No: An owner may receive a Home Energy Rebate and claim a tax credit—a reduction in the amount of taxes owed, or tax liability—if eligible.  In general, the owner cannot claim a tax credit for the portion of the cost paid by the rebate (or by anyone else). For example, Section 25C tax credits may be used for some efficiency measures that are also eligible for DOE rebates.

6. Are heat pump rebate projects also eligible for the 30% tax credit?

Yes, in general a rebate may be combined with a tax credit applied to the balance of the costs.  However, in some instances the eligibility criteria for the rebates may differ from the tax credits, so some people will only be able to claim one of them.

7. For the purposes of eligibility for rebates for low- and moderate-income households, what year is income calculated for and how is it verified?

Individual states will set income verification requirements and procedures, so that is not yet clear. The law states that income qualifications will be based on Department of Housing and Urban Development (HUD)’s calculation of area median income (AMI). These calculations are released annually in March or April for each fiscal year.

Among other methods, states are required to allow residents who have qualified for other federal programs with comparable income limitations (80% or less of AMI in the case of the efficiency rebates, or 150% or less of AMI in the case of the electrification rebates) to qualify automatically. DOE has released a list of approved federal programs for automatic eligibility.

The initial program guidance does not further specify how states must verify income. DOE, in collaboration with the National Association of State Energy Officials (NASEO), will provide assistance and develop additional resources to support states with developing income verification methods.

8. How is eligibility for rebates determined at the point of sale?

States will determine elements of the eligibility verification process, likely using private vendors. For point-of-sale rebates the contractor would need to confirm the income eligibility of the household (see response to question 7) and that they had not already used up their rebates, likely using web-based apps.

The contractor would also confirm that the proposed measures qualify. For the Home Electrification Rebates, the project must be a qualified electrification project, and electrical equipment must be ENERGY STAR certified.

States are not required to provide point-of-sale rebates for the Home Efficiency Rebates. However, DOE has suggested that states may structure their rebate programs to apply rebates in a manner that reduces the purchase price for consumers.

9. How soon do we expect the efficiency and electrification rebates to be exhausted, once offered?

The length of time the rebates will be available is likely to vary considerably by state. Many new homes include heat pumps and other qualifying equipment, so in states that allow electrification rebates for new homes, the money for those rebates could be used up in a couple years. Whole home retrofits are less common, so the efficiency rebate funds may last longer. At a minimum, the law requires that these funds be spent by September 2031.

10. Do tribes have to be federally recognized to receive the electrification rebates?

Yes. The electrification rebate program sets aside $225,000,000 in grants for “Indian Tribes” as defined by the Indian Self-Determination and Education Assistance Act (25 U.S.C. 5304). Indian Tribe is defined there as “any Indian tribe, band, nation, or other organized group or community, including any Alaska Native village or regional or village corporation … which is recognized as eligible for the special programs and services provided by the United States to Indians because of their status as Indians” (see also CRS).

11. Would a nonprofit that pays for and installs qualified electrification projects (QEPs) be able to submit for a reimbursement?

Likely yes. For Home Electrification Rebates, nonprofits that carry out qualified electrification projects are specifically eligible for rebates (along with low- and moderate-income households, multifamily building owners, and other entities carrying out projects, including for-profit companies). Home Efficiency Rebates can go to homeowners or aggregators. “Aggregators” can be any entities approved by the state that oversee or carry out multiple retrofits. States or DOE may provide further details.

12. If rebates flow through state energy offices, are home energy rebate funds provided to states under a formula? How does this work if a state does not have a state energy office (SEO)?

Home energy rebate program funds will be allocated to states, territories, and Tribes by formula, i.e., the total funding that each state is eligible for is pre-determined by DOE using a formula. Initial funds available by state or territory can be found here. In order to access these funds, states must submit an application to DOE with a detailed rebate program implementation plan. After the first two years (August 2024), remaining rebate funds (for example, from state allocations that states chose not to apply for) may be redistributed among states with rebate programs.

All states (and U.S. territories) have designated state energy offices or organizations.

13. Do window-mounted heat pumps qualify for IRA rebates?

Home Electrification Rebates: Not currently. DOE has specified that heat pumps need to be ENERGY STAR certified for both heating and cooling. Mini-split heat pumps, typically mounted on the inside and outside of a wall, may qualify as well as central heat pumps, but there currently is no certification (or even an efficiency rating) for window-mounted heat pumps (also called room heat pumps). When they are certified, they will qualify.

Home Efficiency Rebates: Likely yes. The home efficiency rebates are designed to compensate homeowners for overall energy savings, regardless of equipment type. While the law does not exclude any specific equipment, it is possible that further DOE or state guidance may prioritize certain energy saving strategies.

14. How does the contractor $200 incentive program work?

The IRA includes a $200 incentive to contractors or aggregators for each Home Efficiency qualified energy efficiency retrofit performed in a disadvantaged community. DOE defines a “Disadvantaged community” using Justice40 initiative’s Climate and Economic Justice Screening Tool. States may also apply with DOE to adopt an alternate definition. The Home Electrification rebates include up to $500 (depending on the size of the project) for the installer of any project.

Additional details on the contractor incentive program will be detailed in state guidance.

15. Does anyone have recommended strategies to use the IRA rebate programs with Low Income Housing Tax Credit (LIHTC) properties? Federal grants reduce LIHTC eligible basis or are treated as taxable income.

Eligible basis, calculated based on total construction costs, is used toward the calculation of the total tax credit for LIHTC properties.   

We have raised this issue with DOE. For tax purposes, DOE has stated that the home energy rebates will be treated as a reduction in the purchase price or cost of property, i.e., a reduction in the eligible basis.  Note that the 45L tax credit for new or substantially renovated homes does not reduce the LIHTC basis.

16. What is the difference between a refundable and nonrefundable tax credit? Are any tax credits refundable?

A tax credit reduces the amount of tax liability, or taxes owed, for an individual or organization. If a tax credit is refundable, this credit will be applied regardless of the amount of tax liability. If it is nonrefundable, the tax credit will only be applied to the total tax liability. For example, if a homeowner qualifies for a $600 tax credit but has no tax liability, they will receive a $600 tax refund if this credit is refundable and will receive nothing if the tax credit is nonrefundable. Consequently, nonrefundable tax credits may be less relevant for low-income households, which typically have no tax liability.   

25C and 25D tax credits are nonrefundable. From an IRS Fact Sheet: “Q2. Are the credits refundable or nonrefundable? (added December 22, 2022) A2. Both the Energy Efficient Home Improvement Credit and the Residential Clean Energy Property Credit are nonrefundable personal tax credits. A taxpayer claiming a nonrefundable credit can only use it to decrease or eliminate tax liability. A taxpayer will not receive a tax refund for any amount that exceeds the taxpayer’s tax liability for the year.”

45L tax credit and 179D tax deduction are nonrefundable. But the business can carry the unused credit or deduction forward to reduce tax liabilities in future tax years. And nonprofits and government agencies can allocate the 179D deduction to the primary “designer” of the project, which could include architects, engineers, or energy service companies.

17. Is the “carry forward” provision applicable to both 25D and 25C?

Yes for 25D, no for 25C. A taxpayer may carry forward the 25D clean energy tax credit to another tax year, but not the 25C energy efficiency credit. See IRS Fact Sheet, p. 6-7.

18. Can any tax credits in the IRA or BIL be transferred or sold to investors?

Yes for the business tax incentives, Government agencies and nonprofits can transfer the 179D tax deduction—for owners of multifamily buildings over three stories pursuing qualified energy efficiency upgrades—to the primary designer of the qualifying building systems (and should be aware of this in negotiating the contract). The business investment tax credit (Section 48) and production tax credit (Section 45) for commercial renewables, including for large multifamily building owners, generally are either refundable or transferable. The personal tax credits, including Section 25D and 25C, cannot be transferred or sold.

19. Can a homeowner receive credits if they received energy efficiency measures free of charge from a nonprofit or utility program?

No. The tax credits are generally based on the cost paid by the taxpayer. The Home Energy Rebates also will be based on the cost, but the nonprofit or utility might be able to claim the rebate, depending on further DOE or state guidance.

20. Are undocumented community members eligible for tax rebates?

Yes. Generally, undocumented community members who pay taxes are eligible for tax credits, unless the tax credit specifically requires a social security number (such as the Earned Income Tax Credit) (source: CRS). The two efficiency tax credits available to households, Section 25C (energy efficiency credits) and Section 25D (clean energy credits), do not require that the taxpayer have a social security number.

21. ASHRAE Standard 90.1 is updated every three years.  Which year will the IRC 179D be using?

The current baseline is ASHRAE Standard 90.1-2007. Starting in 2027, the baseline will be 90.12019.

The tax code specifies 90.1-2007 or the most recent ASHRAE 90.1 published for which “DOE has issued a final determination, and which has been affirmed by the Secretary, after consultation with the Secretary of Energy, for purposes of this section not later than the date that is 4 years before the date such property is placed in service.” Treasury affirmed 90.1-2019 in December 2022, to take effect in 2027.

22. Are any tax rebates available retroactively? That is, can these tax credits be claimed for measures that were installed in previous years?

Yes – to varying degrees. The tax credits (Section 25C, 25D, 45, 48, and 179D) are generally available for measures “placed in service” (installed and usable) in 2023. There also are tax credits for measures installed in earlier years, but the credits for individuals would have to be claimed on prior-year tax returns and often (including for all the energy efficiency incentives) under earlier, less generous rules.

States have not yet set rules for the Home Energy Rebates but are not likely to make them retroactive.

23. Are there sources of funding (not restricted to IRA or IIJ) that are available at the time of construction for deed-restricted properties? Are there sources that are available for substantial rehabilitation of such properties?

Deed restrictions are limits placed on public or private property by a public or private entity. For example, a city may require that a building be used for affordable housing. Deed restrictions would not generally affect eligibility for the federal funds. Depending on the restrictions, they might be one method of showing that residents are (or will be) low-income, a criterion for some programs. However, it is important to note that certain deed-restricted properties may have difficulty using certain types of funding because they utilize complex financing that makes it difficult to incorporate grant funding.

24. Are there sources of funding available to buildings that will be subsidized after a retrofit is completed?

Maybe. We are not aware that programs have specified whether buildings that will receive rent assistance after retrofits (but do not currently) are eligible. For multifamily buildings that may be eligible for HUD-subsidies, applicants could consider contacting HUD to explore eligibility. State energy offices may not yet have answers on the DOE rebates. Other programs may not have any income restrictions, so the buildings would be eligible.

25. Can any funds be used to upgrade circuit/breaker boxes or to complete capacity upgrades in homes to support future upgrades?

Some federal funds are specifically designed to support single-family and multifamily home electric upgrades. Depending on state-level program design, other federal funds may also be eligible for such upgrades.

The Home Electrification Rebates will include up to $2,500 per home for electric wiring upgrades and up to $4,000 for breaker box upgrades. The Home Efficiency Rebates likely could include electrical work needed to install energy-saving equipment, which further guidance from DOE and states will clarify.

The 25C tax credit includes up to $600 for electrical panel and circuit upgrades that enable installation of a heat pump, heat pump water heater, or other efficient equipment that also qualifies for the tax credit. Other broad climate funding (such as the Climate Pollution Reduction Grants, Greenhouse Gas Reduction Funds, or others) might also be able to support electrical work.

26. If you already have a climate action plan, can you still apply for implementation funding through the Climate Pollution Reduction Grants (CPRG)?

Yes, though the plan may need to meet certain criteria. EPA has said governments can apply for grants to implement climate action plans even if they did not receive a CPRG planning grant, i.e., a Phase 1 grant. The Notice of Funding Opportunity detailing requirements should be available later this year (2023).

27. Are there any new federal funding sources that would allow bigger nonprofits to act as intermediaries, redistributing funds to smaller CBOs who can then help to support the outreach and direct disbursement of funding?

Depends on the program. The EPA Environmental Justice Thriving Communities Grantmaking Program is designed for that, and the Environmental Justice Government-to-Government Program is for government agencies in partnership with CBOs. The Clean Communities Investment Accelerator in the Greenhouse Gas Reduction Fund (GGRF) will use nonprofits to support community development financial institutions (CDFIs) and other local financial institutions, which may include CBOs.

28. How can the Low-Income Home Energy Assistance Program (LIHEAP) be used for weatherization?

States may allocate up to 15 percent of their LIHEAP funds (or up to 25 percent if they apply to receive a waiver) to residential weatherization or energy-related home repair. The majority of states already set aside a share of LIHEAP for these purposes, in some cases as a result of state legislative requirements to do so. These funds can be used to support weatherization measures in income-eligible households, including envelope improvements, other efficiency upgrades, or energy-related home repairs. State programs may vary in scale and scope. Funds are typically administered by the same office that administers Weatherization Assistance Program funding.