Stimulus Tax Credits and Rebates

RSC Heating & Air Conditioning Rebate Program

Geothermal Tax Credits 30% Uncapped Through December 16, 2016

How the Program Works

An exciting new tax credit is now available for home and commercial building owners who install geothermal heating and cooling systems through the Energy Improvement and Extension Act of 2008 (H.R. 1424). H.R. 1424 offers a onetime tax credit of 30% of the total investment for homeowners who install residential ground loop or ground water geothermal heat pumps. A credit of 10% of the total investment is also available (no maximum) for a commercial system installation.

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.

Highlights

Geothermal heat pumps

  • There is no maximum credit for systems placed in service after 2008.
  • Systems must be placed in service on or after January 1, 2008, and on or before December 31, 2016.
  • The geothermal heat pump must meet federal Energy Star criteria.
  • The home served by the system does not have to be the taxpayer’s principal residence.

Significantly, The American Recovery and Reinvestment Act of 2009 repealed a previous limitation on the use of the credit for eligible projects also supported by “subsidized energy financing.” For projects placed in service after December 31, 2008, this limitation no longer applies.