Thinking about a Geothermal Heat Pump? There’s a Tax Credit Available!A geothermal heat pump (GHP) offers the most energy efficient option available for heating and cooling your home, and if you install it by the end of 2016, you could be eligible for a federal tax credit. A GHP uses the same heat transfer technology that an air source heat pump does, but instead of using air to exchange the heat, it does so underground, where temperatures are stable year round.

Qualifying Equipment

The federal tax credit applies to GHPs that meet the Energy Star program’s standards at the time they were installed. They can be either ground- or water-source, and both open and closed loop systems qualify. It’s not necessary to add a water heating system to the GHP, called a desuperheater, to the GHP to qualify for the tax credit, although doing so will provide you with low-cost water heating for years to come.

The credit allows you to claim 30 percent of the equipment and its installation, and there’s no ceiling on the amount you can claim. This credit is part of the Recovery Act of 2009 to spur investment in equipment that provides exceptional energy efficiency.

Using the Credit

To use the tax credit, you must have the geothermal heat pump installed before December 31, 2016 and file Form 5695. The credit applies for primary and secondary homes, but can’t be used for rental property. You can claim it for new home construction or a retrofit in an existing property.

It’s important to work with a trusted HVAC contractor who has the knowledge and experience about GHP systems before you make your final decisions about the GHP you select. To get the best performance, the heat pump itself will need to be accurately sized for your home, as well as the underground loop field. The ductwork will also have to be assessed for size and suitability with the GHP.

If you’d like more information about the geothermal heat pump tax credits, contact Stack Heating & Cooling, providing trusted geothermal HVAC services for greater Cleveland homeowners.

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

Credit/Copyright Attribution: “Paul Fleet/Shutterstock”

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