Other Tax Credits Have Expired, But Not Those For Geothermal
Geothermal is the most efficient energy source available to homeowners in the United States. That’s a sweeping statement, but the facts back it up — and now the tax credits do, too. For every four units of energy a geothermal installation delivers, it consumes one unit of electricity. With a 400 percent efficiency rating, geothermal far surpasses conventional electricity and gas or even green alternatives like solar. Geothermal utilizes a heat pump and the earth’s steady underground temperature of 55 to 65 degrees year-round here in southwestern Florida as a heat source in the winter and a heat sink for extracted heat during summer. The rapid advance of geothermal installations has not gone unnoticed by legislators. While tax credits for other energy-saving devices like air conditioners have been allowed to expire, the 30 percent tax credits for geothermal installations have been extended.
Here’s some of the fine print:
- The geothermal tax adjustment is a credit, not a deduction. That means it takes 30 percent directly off the amount of tax you owe at the bottom of your federal tax return and puts it back in your pocket.
- Previously capped at $2,000, there is now no upper limit to the amount of the credit. If the amount of the tax credit exceeds tax liability for a specific year, the balance can be carried over to the next year.
- The tax credits apply to the entire cost of a geothermal installation, including parts, labor such as excavation and in-house additions like ductwork upgrades necessary to host a geothermal system.
- The location of the installation may be a taxpayer’s principal residence or a secondary residence such as a vacation home.
- Water-to-water geothermal systems are covered under the credit as long as they were purchased after Dec. 1, 2009.
- Taxpayers may apply for the 30 percent geothermal tax credits by completing IRS Form 5695 and submitting it with their annual tax return.
Symbiont Services Corp. introduced geothermal to the Florida Suncoast over 25 years ago. We’re here with sales and service when you’re ready to go geothermal.
Our goal is to help educate our customers about energy and home comfort issues (specific to HVAC systems). For more information about tax credits and other HVAC topics, download our free Home Comfort Resource guide.