A geothermal heat pump is the most energy efficient and durable system you can use in your home and a federal tax credit exists to help you offset the higher cost of these systems. A heat pump cools and heats by moving heat from one place to another. While air-source heat pumps depend on outdoor temperatures to harvest or deposit heat, a geothermal system executes this process by using underground resources.
Since temperatures vary little underground throughout the year, the geothermal system is more efficient at both heating and cooling. They use a loop field that's buried deeply underground as the resource for depositing heat in the summer and the resource in the winter. It's the loop field that adds the extra cost to a geothermal heat pump, and the tax credits will help offset this expense.
Homeowners who install a qualifying system can deduct its entire cost, with some exceptions, to receive a 30 percent credit on federal taxes. This credit applies to primary and secondary homes, but not rental properties. It even applies to new home construction. The program is so generous because geothermal systems have a low carbon footprint. The loop field can last 50 years or more, and the heat pump itself may last 25 years.
The federal tax credit won't cover the cost of the ductwork or a backup heating coil, but it will cover the cost of the desuperheater, an upgrade that takes the heat from your home and uses it to heat your water.
A geothermal system must meet the requirements for the Energy Star program to qualify and it must be installed on or before December 31, 2016. You can deduct the entire cost of the system, except for the ductwork and heating coil, to receive the credit. There's no cap on the amount you can deduct for the loop field and the remaining heat pump and desuperheater if you opt for this upgrade.
If you'd like more information about a geothermal heat pump and the federal tax credit, contact Air Assurance, serving Broken Arrow homeowners with HVAC services since 1985.
Our goal is to help educate our customers in the Tulsa and Broken Arrow, Oklahoma area about energy and home comfort issues (specific to HVAC systems).
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