Thinking About Geothermal? Tax Credits Can Make It More Affordable

Thinking About Geothermal? Tax Credits Can Make It More AffordableHomeowners considering installing a geothermal heating and cooling system in a new or existing home should know more about the federal tax credits available to reduce the overall expense of buying and installing geothermal. Geothermal heating and cooling systems are proven money savers over the long term, yet the upfront cost can be prohibitive for many homeowners. Taking advantage of the available tax credits can make your geothermal system much more affordable.

Geothermal systems work by exchanging heat between the earth and your home. Since underground temperatures remain a nearly constant temperature of 50-60 degrees several feet below the surface, the earth (or a water source) can be used as a heat source in the winter and will absorb unwanted heat during summer months.

Current geothermal federal tax credits will reimburse 30 percent of the total cost of your geothermal heating and cooling system with no upper limit on the cost. Since this is a tax credit instead of a tax deduction, you will be saving the full 30 percent of your investment costs. Both labor and all necessary equipment, including piping and wiring, are eligible for the credit. If your tax credit exceeds what you owe in one year, the remainder of the credit will be available for future years. In order to qualify, your system must:

  • Utilize the ground or ground water as a thermal heat source and a thermal heat sink depending on time of year
  • Meet Energy Star guidelines on any mechanical portions of the system

The credits are available through Dec. 31, 2016. You may claim the credit not only on your primary dwelling but also on a vacation or second home. However, the credit cannot be applied to:

  • New geothermal systems for rental homes
  • Interior ductwork and distribution systems
  • Any emergency backup heating system

If you are a homeowner in the Overland Park, Johnson County, or the greater Kansas City Area interested in learning more about geothermal energy, contact the experts at Overland Park Heating and Cooling, Inc. We have been serving the area since 1983.

Our goal is to help educate our customers in Overland Park, Kansas about energy and home comfort issues (specific to HVAC systems). 

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