Go Green With Geothermal and Uncle Sam Might Pay You!
One of the bigger financial benefits of installing a geothermal system is the tax credit that you will be eligible to receive. When the Energy Improvement Act of 2008 was passed it offered a one time tax credit of 30% of the TOTAL investment for homeowners who install residential ground loop or ground water geothermal heat pumps. So let’s say for instance you install a geothermal system at your home and the total cost is $32,000.00 the tax credit that you will receive is $9,600.00! That’s not bad! Doing what is best for the environment and getting money back from Uncle Sam to do it!
To qualify for the credit the system must meet or exceed EnergyStar requirements and be installed after December 31,2007. Units that were installed in 2008 are subject to a $2,000.00 cap on the credit. If the unit was installed from 2009-2016 then the homeowner can take advantage of the full 30% uncapped credit. Covered expenditures include labor for on site preparation and assembly or original system installation and for piping and wiring to connect the system to the home. The structure must be located in the United States and used as a residence by the taxpayer, although primary residency is not required.
Homeowners can file for the credit by completing tax form 5695, which has yet to be published for the 2009 tax year. The tax credit can be used to offset both regular income taxes and alternative minimum taxes. If the federal tax credit exceeds tax liability, the excess amount may be carried forward into future years. The tax credit will be available until December 31, 2016.
This tax credit “The Energy Credit” can also be applied to solar-electric systems, solar water heaters, and wind turbines. If you are thinking about using alternative energy sources then this is a good time to move forward. The tax credit gives you a little bit more incentive to “Go Green” with your energy systems.
For more information and to see a draft of the Form 5695 you can visit the IRS website.
