If you’ve had your eye on tax credits for energy efficiency, you know that some have already expired. The chance to claim tax credits after installing an efficient furnace, boiler, air conditioner or air-source heat pump ended in December 2013. However, geothermal tax credits are still available. Learn how much you can save while keeping comfortably cool all summer long.
What is a Geothermal Heat Pump?
This HVAC system functions much the same as an air-source heat pump. The equipment heats and cools your home using electricity. However, instead of transferring heat from the inside of your home to the outside air, geothermal heat pumps transfer heat to and from the ground.
This allows for tremendous energy efficiency, since the soil just a few feet down remains at a much more constant temperature than outdoor air. In fact, geothermal heating and cooling is among the most efficient ways to keep your home comfortable year round.
Geothermal Tax Credits
If your existing equipment is aging, this is the perfect time to take advantage of geothermal tax credits. Qualifying geothermal heat pumps installed through the end of 2016 will bring a 30 percent tax credit, including the cost of installation, with no upper limit. Both existing and new homes qualify for the credit, as do both primary and secondary homes. However, rental properties are not eligible.
Note that this is a tax credit, not a tax deduction, meaning it directly offsets the amount of taxes you owe rather than simply reducing your taxable income. The investment savings can obviously be substantial.
Qualifying geothermal heat pumps must meet the minimum Energy Star program requirements that are in effect at the time of installation. All associated materials, such as piping and wiring, are included in the tax credit. However, new ductwork and backup heat components are not covered by the federal tax credit.
When you combine the financial benefit of this generous tax credit with immediate savings on monthly energy bills, a geothermal heat pump might be well within your budget.
To claim the credit, fill out Form 5695 and submit it with your tax return for that year.
It’s clearly an exciting time to install geothermal heat pumps. To learn more, please contact us at Ace Hardware Home Services, Inc. in Dayton today.
Our goal is to help educate our customers in Dayton, Ohio about energy and home comfort issues (specific to HVAC systems).
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