Geothermal Tax Credits Significantly Reduce the Cost of These Systems

Geothermal Tax Credits Significantly Reduce the Cost of These SystemsIf you have considered installing a geothermal heating and cooling system in your new or existing home but have been dissuaded by the costs, now may be the perfect time to act. Federal tax credits currently available on systems installed through December 31, 2016, reimburse a full 30 percent of the cost of your geothermal system, with no upper limit on the cost of the project.

Geothermal systems are highly efficient as they use the ground (or ground water) as a heat sink in summer and a heat source in winter. At 20 feet below the surface, ground temperatures remain 50 to 60 degrees year round. Through a series of buried pipes containing a flowing antifreeze solution, the temperature of your home can be adjusted to your preference with the help of the mechanical heat exchanger in your geothermal system.

Homeowners are currently eligible to claim the geothermal tax credits on:

  • New home construction projects as well as existing structures. In order to qualify, the new geothermal system must use Energy Star mechanical components while utilizing the ground or ground water as a heat sink in summer and a heat source in winter.
  • Principal residences as well as second homes
  • Labor costs needed for installation of the system and all piping, wiring, and mechanical components

The credits may NOT be claimed on:

  • Geothermal systems installed on rental property
  • Indoor ductwork
  • Emergency backup heating systems
  • Geothermal systems designed to exclusively heat a hot tub or swimming pool

Because the current geothermal tax credits are actual credits instead of deductions, homeowners will be able to save a full 30 percent on the expenses associated with the installation of a new geothermal system. If the amount of the credit exceeds what you owe in one tax year, the remaining credit remains available for future years.

If you are a homeowner in the Novi, Farmington or other surrounding areas of Southeast Michigan, the friendly staff at Aladdin Heating & Cooling would love to help you learn more about geothermal energy and the geothermal tax credits currently available. We have been serving the area since 1945.

Our goal is to help educate our customers in Warren, Michigan about energy and home comfort issues (specific to HVAC systems).  For more information about geothermal tax credits and other HVAC topics, download our free Home Comfort Resource guide.

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