Geothermal Tax Credits

geothermal tax credits « green products « home

Homeowners and commercial building owners can benefit from an exciting new tax credit when they install a ground-loop or groundwater-loop geothermal system. The Energy Improvement and Extension Act of 2008 (H.R. 1424) offers a onetime tax credit of 30% of the total investment for residential geothermal heat pumps. Those installing commercial systems can enjoy a credit of 10% of the total investment (no maximum).

To qualify, the systems must meet or exceed EnergyStar requirements and be installed after December 31, 2007. While units installed in 2008 are subject to a $2,000 cap on the credit, units installed from 2009 through 2016 can take advantage of the full credit. Owners can file for the credit by completing the Renewable Energy Credits subsection on their tax return forms for 2008. For taxpayers that are subject to the Alternative Minimum Tax, they can claim the credit on their taxes for the following year. No proof of purchase will be required; however, in case of an audit, owners are encouraged to keep a detailed invoice of their purchase on file. The contractor who sold and installed the product should list the purchase as a "Geothermal Heat Pump" on the invoice and that it "Exceeds requirements of Energy Star program currently in effect".

The tax credit is available through December 31, 2016. Consult your local tax professional for advice on taking advantage of the tax credit, as this announcement is not intended as a recommendation or endorsement of any financial strategy.