Considering a Geothermal Heat Pump? You Can Get a Tax Credit!Besides their exceptional comfort, energy efficiency and durability, opting for a geothermal heat pump (GHP) as part of your HVAC system can net you a generous federal tax credit if you install it before the end of 2016. This program makes installing a GHP more affordable, which makes it possible for more homeowners to choose these types of systems.

System Requirements

In order to use the tax credit, the GHP must have Energy-Star status at the time it was installed. The installation doesn’t need to include a desuperheater, an upgrade that uses the waste heat in the summer to heat water. The program covers installation in new and existing primary and second homes, but won’t cover rental units. The purchase and installation must be complete by December 31, 2016.

You can deduct the entire cost of the purchase and installation for a GHP to receive a 30 percent tax credit. There is no upper limit on the amount you can claim or receive under this program’s provisions. When filing your taxes, you’ll need to use Form 5695.

Getting Started

You’ll have to work with a trusted HVAC contractor who has the knowledge and skill to install a geothermal heat pump. They use an underground loop field that either uses the ground for heat transfer or a nearby water source instead of the outdoor air like an air-source heat pump does. Determining the depth and size of the loop field requires a geological analysis of your yard. The size of the GHP is crucial for its top performance, as well as the ductwork distribution size and configuration. Your contractor will use software tools to determine the optimal capacity for both.

Since the GHP must be an Energy Star model to qualify for the tax credit, you and the contractor will have to select among those models that meet the qualifications of this program.

For more information about the tax credit for a geothermal heat pump, contact Mowery Heating, Cooling and Plumbing, providing outstanding HVAC and geothermal services for Indianapolis homeowners for more than 40 years.

Our goal is to help educate our customers in Brownsburg, Indiana and surrounding areas about energy and home comfort issues (specific to HVAC systems). 

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