Thinking About a Geothermal Heat Pump? You Can Get a Tax Credit!If you’ve been considering replacing your existing HVAC system with a geothermal heat pump (GHP), 2016 may be the most advantageous time to do so. The Recovery Act of 2009 made tax credits available for homeowners who install exceptionally efficient HVAC and solar equipment. While some of provisions for high efficiency equipment have expired, the credits are still available for GHPs and solar systems that end in 2016.

The remaining tax credit for GHP equipment makes it possible to offset the higher initial cost of GHP systems. They consume the least amount of energy for heating and cooling homes, which uses the most energy in the typical house. Reducing energy consumption helps homeowners financially and benefits energy providers alike, since they don’t need to increase their capacity to serve their customers.

Requirements for the Program

  • In order to qualify for the tax credit, the GHP must be:
  • Designated as an Energy Star or Most Efficient appliance at the time it was installed.
  • Completely installed by December 31, 2016.
  • Placed in a home you own (not rent) and use as a residence. Both new and existing homes qualify.
  • Reported on Form 5696.

The credit allows you to deduct 30 percent of the total cost of the geothermal heat pump and its installation. You do not need to install a desuperheater, a device that uses the waste heat from your home to heat water. You’ll have to work with a licensed contractor to select and install the system, since they involved a geological and hydrological study of your yard and home.

The subsoil characteristics of your yard and its proximity to a dependable water source drive the type of GHP you can use. Like any new HVAC system, the contractor has to carefully assess your home’s energy efficiency, your usage patterns and preferences, and its cubic footage to learn the optimal size and air distribution for the indoor equipment.

For more information about taking advantage of the tax credit for a geothermal heat pump, contact Team Bob’s Heating Cooling Plumbing, providing top-notch HVAC services for homeowners in Grand Traverse County and the surrounding areas.

Our goal is to help educate our customers in Traverse City, Michigan and surrounding areas about energy and home comfort issues (specific to HVAC systems). For more information about geothermal heat pumps and other HVAC topics, download our free Home Comfort Guide or call us at 231-714-6196.

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