Geothermal Financing & Tax Credits

Residential Financing & Incentives: Geothermal Tax Credits

With today’s incentives and financing options available, especially the geothermal tax credits for residential customers. Homeowners can afford the most efficient heating and cooling systems ever imagined. If you choose to finance the system, the savings can often cover an increase in your mortgage or the amount of the loan payments – in some cases with No Money Down! For those paying cash, it’s perhaps the best investment you can make in your home with outstanding returns.

Incentives & Financing Options

Unlimited Federal Geothermal Tax Credit – Info

February 9, 2018, a bill was signed into law restoring the 30% federal tax credit for geothermal heat pumps in the residential sector.  These tax credits are retroactive to Jan 1, 2017, so homeowners who bought a system last year are eligible for the 30% credit. Credits have been extended to December 31, 2021. They’ll remain at 30% until December 31, 2019, at which point they’ll begin a phase-out. For 2020, the credit will move to 26% and in 2021 the final incentive will be 22%.

The Bipartisan Budget Act of 2018, signed in February 2018, reinstated the tax credit of geothermal heat pumps to § 25D of the Internal Revenue Code.

The property credit provides 30% for systems placed in service by 12/31-2019, 26% between 12/31/19 and 1/1/2021 and 22% between 12/31/2020 and 1/1/2022. Significantly, The American Recovery and Reinvestment of 2009 repealed a previous limitation on the use of the credit for eligible projects that are also supported by “subsidized energy financing.” For projects placed in service after December 31, 2008, this limitation no longer applies.

Claiming the Credit

IRS Form 5695 is used to claim the Residential Energy Credit. (IRS FORM)

Georgia and Florida Geothermal Energy Tax Incentives Available

Visit the DSIRE Website shown below to find out if there are state and local residential energy tax credits available in your area..

Simply select “Geothermal Heat Pumps” from the “Technology” drop down menu and then click on your state to view all the programs or energy credits available for geothermal heat pumps in your state.

Geothermal heat pumps

• 30% for systems placed in service by 12/31/2019
• 26% for systems placed in service after 12/31/2019 and before 01/01/2021
• 22% for systems placed in service after 12/31/2020 and before 01/01/2022
• 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, 2021.
• 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.

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