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Unformatted text preview: UNDERSTANDING THE FEDERAL TAX INCENTIVES for RESIDENTIAL GEOTHERMAL HEAT PUMPS The Energy Credit In October 2008, geothermal heat pumps were added to section 25D of the Internal Revenue Code. This created a 30% tax credit for costs associated with qualiFed geothermal equipment “placed in service” through the end of 2016. Property is usually considered to be placed in service when installation is complete and equipment is ready for use. However, if the system is part of the construction or renovation of a house, it’s considered placed in service when the taxpayer takes residence in the house. 30% of total system cost • No limit to credit amount for 2009 and beyond • Can be used to offset AMT tax • Can be used in more than one year • Can be combined with solar and wind tax credits • Can be combined with energy efFciency upgrade credits • What’s Eligible Geothermal equipment that uses the stored solar energy from the ground for heating and cooling, and that meets Energy Star requirements at the time of installation is eligible for the tax credit. Covered expenditures include labor for onsite preparation, assembly, or original system installation and for piping or wiring to connect a system to the home. The structure must be located in the United States and used as a residence by the taxpayer, although primary residency isn’t required. In fact, if geothermal is installed in more than one home, taxpayer, although primary residency isn’t required....
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- Winter '10
- RNA, Taxation in the United States, tax credit