Federal legislators have given a big vote of confidence to home geothermal or solar installations. Geothermal heats and cools your home more efficiently than any other technology. Solar power is now the world’s fastest-growing renewable source of energy. While the time period for tax breaks covering a range of energy-saving appliances expired at the end of 2011, the 30 percent tax credit for geothermal or solar got a new lease on life. Now valid through 2016, this important legislation gives homeowners a major break on installation costs and helps move up the day when a geothermal or solar system pays for itself.
Unlike a deduction that merely reduces taxable income, the 30 percent federal tax credit is directly subtracted from the tax you owe the IRS, allowing you to use that money for a geothermal or solar installation. Here’s the fine print:
- 30 percent of the hardware and installation cost of residential ground-source geothermal or solar photovoltaic energy system is eligible for the credit, as long as the equipment was installed after 2008. Water-sourced geothermal systems are not eligible if they were installed before Dec. 1, 2009.
- The system must be installed at the principal residence of the taxpayer claiming the credit or at a secondary residence such as a vacation home.
- Costs relating to site preparation and installation of all required equipment are eligible for the credit. In a solar system, this includes all photovoltaic panels, wiring and equipment such as inverters. Geothermal heat pumps, air handlers, and the excavation or drilling necessary to install the buried loop fields are all eligible.
- There’s no maximum amount for the credit. If your total credit exceeds your tax liability in one year, you can carry over the remaining amount to the next year’s tax return.
- IRS Form 5695 should be completed and submitted with the annual tax return in order to claim the 30 percent tax credit.
Combining four local companies into one outfit with 120 years experience serving the Wichita area, Comfort Systems is the source for trusted HVAC sales and service. Call us for more details about the tax advantages of upgrading to geothermal or solar now.