Use tax credits to buy a geothermal system
Informed homeowners desire the many real benefits of using a geothermal system to condition their living space. They crave the greatly reduced utility bills, the quiet operation and the elimination of an exterior unit. Unfortunately, many of these folks have accepted the misconception that the initial costs of geo systems are too prohibitive.
Although there are many ways a geo system provides value and pays for itself, the advent of the federal tax credit blows up the equation, and I mean that in a good way! Here are the basics on how the credit program works:
- The federal government will give you a tax credit equaling 30 percent of the cost of a qualifying geothermal heatpump system, including installation. The credit is available until December 31st, 2016.
- This is a tax credit, not a deduction, so the amount is subtracted directly from your tax debt.
- A qualifying system is one that meets the requirements of the Federal Energy Star Program. Ask a trusted geothermal contractor what equipment is eligible.
- The credit can be used for replacement in an existing home or in new residential construction. Second homes also qualify, but rental properties do not.
- There is no upper limit or cap to the credit. It can be used to offset regular federal income taxes or alternate minimum taxes and can carry over to future years.
- Save your receipts and the manufacturer's certification statement given to you by the geo installer you have chosen. Bring these to your tax preparer, and you are done!
For example, if the cost of installing a new geo system in your home is $22,000, you will receive a tax credit of $6,600.00. Your net cost ends up being $15,400. Remember, there may be other state or local incentives in your area. Often, the tax credits, incentives and rebates available for a geothermal heatpump installation ensure an amazingly short payback period.
This expert insight brought to you by Russ Scott, general manager of Scott-Lee Heating Co. and an Enertech Global LLC geothermal dealer.
Russ Scott Russ Scott has worked for more than 16 years at Scott-Lee Heating Co., and is now the general manager of the business his father co-founded. He received business and creative writing degrees from St. Louis University, is on the S.M.A.C.N.A. - St. Louis Board of Directors, is a Contractor Rep on the Local 36 Apprentice Committee and is involved with the local H.B.A. and A.C.C.A. chapters. Russ enjoys sharing his knowledge of all high-efficient HVAC systems, especially geothermal heat pumps.