Get a Federal Tax Credit for Installing a Geothermal Heat Pump

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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Going Geothermal: Clean, Efficient Cooling for Tulsa's Hot Summers

Going Geothermal: Clean, Efficient Cooling for Tulsa's Hot Summers

Homeowners who strive for a high level of energy efficiency and longevity with their HVAC systems often choose geothermal heat pumps (GHPs). These systems top the list for both and provide all the cooling you need for Tulsa's long and hot summers. A GHP uses underground thermal energy to provide both cooling and heating by exchanging heat. In the summer, the GHP sends it underground, and in the winter, it removes the heat from the ground.A GHP consists of an underground loop field and an indoor air handler. Heat from the home is conveyed through refrigerant in the air coil to the underground loops, where the heat is absorbed by the earth. The compressor turns the refrigerant back into a liquid that is recirculated back to the air handler. It flows through the evaporator coil, and once again, picks up the excess heat in your home. The cycle continues until your home reaches the thermostat's setting.These systems offer much higher efficiency than standard air-source heat pumps or air conditioners because the temperatures underground are much cooler than the outdoor air and remain stable day and night. If you combine a desuperheater with the GHP, you can heat your water during the summer with the waste heat from your home.Besides conditioning bills that may be as much as 60 percent lower, your geothermal system lasts longer than conventional cooling systems. The loop field can last 50 years or more and the air handler 25 years with routine maintenance.These systems are so efficient and advantageous for homeowners that a federal tax credit exists to cover 30 percent of the cost and installation of qualifying systems. It's valid through the end of December 2016 and there's no upward limit on it.GHPs cost more than standard heat pumps or air conditioners, largely because of the loop field's installation, which varies based on the size of GHP you need, the yard's size, landscaping and soil conditions.If you'd like to learn more about a geothermal heat pump, contact Air Assurance. We've provided HVAC services for Tulsa and Broken Arrow 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).  Image courtesy of Shutterstock

Will The Insulation You Add This Winter Qualify For A Federal Tax Credit?

If your home is leaking hot and cold air, the federal government will pay you to add insulation to reduce or prevent the leakage. You can take a tax credit for insulation added to your home for up to 10 percent of the cost, with a maximum credit of $500. A tax credit is a dollar-for-dollar reduction of your tax bill. It is, in effect, a discount on the cost of your insulation.What QualifiesAlmost any type of insulation that saves energy will qualify for the tax credit.  There are many types of insulation, each suitable for a specific purpose. It can be in the form of rolls, flat pieces (batts), loose pieces, sprays and other types. It can be made of a variety of materials, the most common of which is fiberglass. Products that stop air leaks, such as weather stripping may also qualify if the manufacturer certifies its effectiveness. What doesn’t qualify is the cost of installation, and you have to decide whether you have the do-it-yourself skills to choose the right insulation and install it properly.How to ApplyTo qualify for the tax credit in 2011, the insulation must be installed and ready for use by 12/31/2011 (the IRS term is “placed in service”). Merely buying and paying for the insulation will not qualify. You apply for the tax credit by attaching form 5695 to your 2011 federal income tax return. You need not include any invoices or manufacturer’s certifications with the form, but you should keep them for your records should any question arise in the future.Principal ResidenceThe insulation will qualify for the tax credit if it is installed in your main home. Second homes and rental units do not qualify. However, your main home can be a boat, a condominium, a trailer or any other dwelling located in the U.S., where most of your time is spent.If you live in the Broken Arrow/Tulsa area, and you need more advice, let one of our trained technicians help you. Contact us at Air Assurance.Our goal is to help educate our customers about energy and home comfort issues (specific to HVAC systems). Air Assurance services Tulsa, Broken Arrow and the surrounding areas. Visit our website to see our current promotions and get started today!      

Tax Credits Still On For Geothermal Heat Pumps

The federal tax credit for installing a geothermal heat pump in your home is still on.  You will save 30 percent of the total cost for your new system, including the installation, with no limit to your savings.How does the system work?  Geothermal heat pumps operate much like any heat pump, except that they extract heat or cold from the ground beneath your home.  Below the surface the ground temperature stays very constant year round.  It is cooler in the summer, warmer in the winter.  By looping coils through the ground you can both warm and cool your home at a lower cost.  This is a much more environmentally safe way to heat your home.  There is no burning of gas or other energy sources which put noxious fumes into the air.  And while there is a small use of electricity, it is nowhere near as great as the electricity required to run an electrically heated or cooled home.  Electricity that is frequently produced by coal fired generating plants.  It is, in fact, a very green answer for those of us that are worried about the planet.Geothermal heat pumps are an efficient and cost effective way to control the heating and cooling of your home, even here in the Tulsa area.How does the tax credit work and why is it better than a tax deduction?  The federal government has recently extended the tax credit for installing one of our geothermal heat pumps.  A tax credit allows you to deduct the entire amount of the credit directly from your tax bill.  No matter what your tax rate, you still get the entire credit applied to your tax bill.A tax deduction, on the other hand, only allows you to reduce your taxable income. If your top tax rate is 25 percent, you then reduce your tax bill by only 25 percent of the deduction.Our goal is to help educate our customers about energy and home comfort issues (specific to HVAC systems).  For more information, click here. Air Assurance services Tulsa, Broken Arrow and the surrounding areas.  To get started, check out our website or see our current promotions.