Considering a Geothermal Heat Pump? A Tax Credit is Available!
Changing to a geothermal heating and cooling system can significantly lower your energy use and utility bills. This type of system uses heat from the ground to warm your home when it’s cold out and takes hot air out of your home in summer. Although the cost of having a geothermal heat pump installed is higher than traditional heating systems, available tax credits can lower this cost.
How Geothermal Tax Credits Work
Homeowners who qualify for a tax credit on geothermal heat pumps can save up to 30 percent of the total cost, which includes labor, and there are no upper limits placed on these savings. This tax credit is available through the end of 2016, so your pump must be installed by Dec. 31, 2016 in order to qualify. If you receive this tax credit, you can use it to offset the cost of geothermal heat pump installation. You can apply for this tax credit by filing tax form 5695 with your annual tax return.
How to Qualify for Geothermal Tax Credits
In addition to the Dec. 31, 2016 deadline, you must meet the following requirements in order to be eligible for a tax credit:
- The heat pump has to be installed in a home that you own and use as a primary or secondary residence. Rental properties aren’t eligible.
- The geothermal heat pump you choose must meet Energy Star requirements. These requirements are the ones that are currently in effect when you purchase your equipment.
Keep in mind that as of 2009, updates to tax credit requirements were made. For example, the pump you choose is no longer required to provide at least some of your hot water supply in order to qualify for a tax credit. Also, water-to-water heat pumps are now eligible for tax credits.
At Sobieski Services, Inc., our goal is to help our customers in Delaware, Pennsylvania, Maryland and New Jersey learn more about energy and home comfort issues — especially HVAC and plumbing issues — so that they can save money and live in healthier, more comfortable homes.