If you are thinking about installing a geothermal HVAC system, you probably already know many of the benefits. What you may not realize is that there are also tax benefits to the installation. If you want the best savings possible, in terms of tax credits, you will want to install your system as soon as possible. Here is what you need to know about the benefits.
What Is the Energy Credit?
An energy credit is a 30% credit that was reinstated through 2019. You can apply it retroactively to any installation after January 2017. This tax will decrease in percentage over the next few years. Through 2019, it is 30% of your total costs, in 2020, it will be 26% and in 2021, it will be 22%.
What Is Eligible for the Credit?
If your geothermal equipment meets the Energy Star requirements and uses stored energy from the ground, then it is eligible for a tax credit. You can cover the expenses of labor, preparation, and installation. If you have more than one property and system, you can claim more than one. Now, you cannot claim the credit if you spend it on equipment used for hot tubs or pools. You also cannot claim it on rental homes.
How Do You Claim the Credit?
In order to claim the credit, you would have to use IRS Form 5695. You can use this tax credit to offset regular income taxes and alternative minimum taxes. If your tax credit exceeds the tax liability, then you can carry the excess amount for future years.
When it comes to a geothermal HVAC system, you not only have a more energy-efficient cooling and heating system but also you can claim tax credits. To install or repair your geothermal HVAC to take advantage of tax savings, contact Chesapeake Geosystems by calling 410-489-1712 or emailing us today to learn more!