Geothermal Tax Incentive
Under the American Recovery and Reinvestment Tax Act of 2009 (ARRA), qualifying heat pumps are eligible for a geothermal tax incentive of 30% of the installed cost without a cap. This residential incentive is available for taxpayers that install a qualified geothermal heat pump at their primary residence or a second home, but unfortunately the law does not allow homeowners to claim the same credit on a rental property.
Any equipment that uses the ground or ground water as a thermal energy source to heat or cool the taxpayer’s residence is considered to be geothermal heat pump property. However, the unit must also meet Energy Star program requirements that are in effect at the time the geothermal heat pump is purchased and installed.
To qualify for the federal geothermal tax credit, tax payers will need to have proof of the cost of the system, when it was installed, and whether the system satisfies the aforementioned qualifying criteria. Taxpayers that install geothermal heat pump systems at their residence should use IRS Form 5695 for the Residential Energy Efficient Property incentive. You can also double check to see if there are any additional tax credits, rebates and/or savings for using renewable energy in your home or business on the US Department of Energy’s website.
Remember, the 30% federal tax incentive is only available until the end of the 2016, so don’t wait! Contact our HVAC experts today to learn about how we can help you save money and enjoy comfort from the ground up with your new geothermal heating and cooling system.
What is Geothermal Heating and Cooling?
Geothermal heating units are unique comfort systems that use the relatively constant underground temperature of the Earth as the exchange medium to heat and cool a building, instead of the always fluctuating outside air temperature. This strategy creates a much more energy efficient and effective heating system for any home or business, even on the most frigid of Connecticut winter nights.
With a geothermal heat pump’s (GHPs) high efficiency rate, you’re guaranteed to stay warm all winter while enjoying much lower operational costs than conventional heater and air conditioning systems. Additionally, geothermal systems provide several environmental benefits, including lower air emissions and 25% to 50% less electricity used than traditional electric heating and/or cooling systems. In fact, geothermal energy has been named by the Environmental Protection Agency (EPA) to be the world’s greenest, most cost-effective and energy-efficient heating and cooling technology available today.
Even further, geothermal systems are incredibly quiet, very easy to maintain, and the life of the system can stretch to approximately 25 years for the inside components and 40 years or more for the loop system that is installed underground. With all of these amazing advantages, it’s no wonder that so many homeowners in Connecticut (and across the country) are installing geothermal systems in their homes.
If you are considering an investment in geothermal energy, now is the time to take action! For homeowners who install a new geothermal heating and cooling system before December 31 of this year, the federal government is offering an incredible tax incentive.