Considering A Geothermal System? You Can Still Get An Energy Tax Credit

Geothermal heating and cooling systems offer many long-term savings, through low energy usage and low expected maintenance and repair costs. They can also offer some short-term savings this year, though, thanks to available energy tax credits from the U.S. government.

The federal government has offered tax credits in recent years to homeowners who improved the energy efficiency of their homes by installing new HVAC equipment, insulation, water heaters or other such high-efficiency upgrades. Most of those tax credits were capped at a few hundred dollars, and the majority of the credits expired at the end of last year. However, the credits for some renewable energy sources, including geothermal and solar systems, are still in effect through the year 2016. And instead of being limited, the energy tax credits for geothermal systems have no cap, and can sometimes amount to thousands of dollars in tax savings.

When you have a qualifying geothermal heating and cooling system installed at your Indianapolis area home, 30 percent of the cost will be cut from your federal tax bill. That 30 percent applies not only to the cost of the equipment, but also to the total cost of having the equipment installed. That means you can start enjoying the long-term benefits of a geothermal system with a lower initial investment, and the resulting energy savings will pay off the investment in about a third less time.

To qualify for the energy tax credit, a geothermal system must meet or exceed certain efficiency ratings. For a closed loop system (which is by far the most common type), the efficiency requirements are:

• An EER (energy efficiency ratio) of 14.1
• A COP (coefficient of performance) of 3.3