Components/work eligible for the 30% tax credit. Help?
Last Post 19 Mar 2015 12:13 AM by rwgardner. 21 Replies.
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rwgardnerUser is Offline
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09 Mar 2015 01:58 PM
Hi, I'm trying to figure out what components of my geothermal installation are eligible for the tax credit. (I've been asking my contractor but they aren't completely certain either.) In particular, there are these items that were all part of the installation contract. (I'm not even sure which ones are really separate components of the installation and which ones are always part of the heat-pump system.) Anyone know which ones are eligible? (I'm starring (*) two I know are eligible.)

*-Waterfurnace 7 Series
-Hot water generation (desuperheater) with factory installed pump
-Waterfurnace ECM fan motor
-aurora advanced control board
-dual flow pump center
-external water storage tank (for desuperheater output)
-Waterfurnace 15KW electric heat package
-Waterfurnace color thermostat
-Lennox air filter
-ductwork
-Aurora Interface Display Service (AID) tool
*-outdoor well work

Please let me know how certain you are and/or how you know.

(Yes, I've read the tax forms and the form 5695 in particular. It's not that explicit/clear.)

Thanks a lot.
rwgardnerUser is Offline
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09 Mar 2015 01:59 PM
If you know just one or two, but are uncertain on others, that would be great too.
ChrisJUser is Offline
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09 Mar 2015 02:15 PM
http://energystar.supportportal.com/ics/support/KBAnswer.asp?questionID=23325

That page mentions that the ductwork is not covered.

My contractors invoice bottom line is what was used, nothing was broken out.

Chris
rwgardnerUser is Offline
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09 Mar 2015 03:08 PM
Thanks. Updated list:

*-Waterfurnace 7 Series
-Hot water generation (desuperheater) with factory installed pump
-Waterfurnace ECM fan motor
-aurora advanced control board
-dual flow pump center
-external water storage tank (for desuperheater output)
-Waterfurnace 15KW electric heat package
-Waterfurnace color thermostat
-Lennox air filter
-Aurora Interface Display Service (AID) tool
*-outdoor well work


My contractor didn't break anything out either. They gave me a single number and actually said the whole thing is eligible for the credit in the contract. But the contract also listed ductwork explicitly as some of the work being done (and I had actually seen that it wasn't eligible) and they also have some disclaimer in the contract about not being tax experts or giving tax advice.

Thanks again.

ChrisJUser is Offline
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09 Mar 2015 05:51 PM
If your really concerned about it ask the contractor to give you a number that is the ductwork portion.

The likely hood of a tax audit are probably very very low.

Chris
LoobyUser is Offline
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09 Mar 2015 06:21 PM
Posted By ChrisJ on 09 Mar 2015 02:15 PM
My contractors invoice bottom line is what was used, nothing was broken out.

Ditto, in 2009, and the IRS never said a word.

One measurement is worth a thousand expert opinions.
rwgardnerUser is Offline
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09 Mar 2015 10:35 PM
Looby, And you were audited?
rwgardnerUser is Offline
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09 Mar 2015 11:08 PM
I wouldn't argue that the IRS isn't going to do anything to me. It seems like I should try to capture the intent of the credit though in the interest of being a good human. (I admit the extent to which that should be done isn't a completely easy question.)

If I claim more than I'm owed on this, why not say I put some solar panels on my house too?
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10 Mar 2015 12:14 AM
Posted By rwgardner on 09 Mar 2015 11:08 PM
If I claim more than I'm owed on this, why not say I put
some solar panels on my house too?

Why not? Because there's a huge difference between lying to the IRS
by making-up pure BS that never happened (a/k/a tax fraud), versus
intentionally interpreting "ambiguities" in such a way as to stretch the
envelope in your favor -- without misrepresenting or twisting the facts
of what actually transpired.

Tax fraud is a crime, punishable by heavy fines and/or imprisonment,
whereas "differences of interpretation" between you and the IRS expose
you only to repayment of disallowed claims, plus interest (at a modest
APR). In the latter case, you're pretty much "home free" unless the IRS
discovers/challenges your "error" within a 3-year statute of limitations.

BTW, no, I was never audited -- and am now well past the 3-year limit.

BTW2, it was my understanding then (and is now) that the entire cost
of my (retrofit) GWHP installation, including ductwork and removal of
the old system, was legitimately eligible for the 30% tax credit. OTOH,
my opinion prolly wouldn't impress many IRS examiners.

...it's always easier to beg forgiveness than to obtain permission,

Looby

One measurement is worth a thousand expert opinions.
joe.amiUser is Offline
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11 Mar 2015 08:39 AM
If you look at it in the context of "geo properties" and "renewable" it becomes slightly clearer mud. By that I mean the buffer tank qualifies because water is heated by the geo, but the finish tank would not. Further heating your home with the geo heat pump = renewable, but auxiliary heater not so much.
Duct work for a whole new house maybe isn't a geo property (since you would have had to buy ducts anyway, but transistions to install a retrofit are necessarily geo properties. New wells for open loop and electrical service panels may or may not qualify.

If someone is concerned with hair splitting, cost of an electric finish tank and an auxiliary heater are about $500 total. So if your installer gave you those at cost that's $150 off your tax credits to keep your morals in tact.

Doc and I have both commented that to avoid the few hundred for the auxiliary heater the IRS did exclude, would in some cases require an extra ton or more of geo which costs 10 times as much and qualifies for ten times as much tax credit.......

If you can't fix stupid, you probably can't fix government.

Finally we run promotions all the time that offer a free water heater with the purchase of a geo system.
Joe Hardin
www.amicontracting.com
We Dig Comfort!
www.doityourselfgeothermal.com
Dig Your Own Comfort!
geomeUser is Offline
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11 Mar 2015 09:14 AM
I'm not a tax pro. That said, if the ductwork needed for geo is larger (more materials and possibly more labor) than that of a conventional system, I'd feel at ease including the incremental cost of the geo ductwork in the tax credit. I would keep sufficient records and quotes to justify this deduction in case it is ever needed. Ductwork wasn't a factor in our retrofit.
Homeowner with WF Envision NDV038 (packaged) & NDZ026 (split), one 3000' 4 pipe closed horizontal ground loop, Prestige thermostats, desuperheaters, 85 gal. Marathon.
rwgardnerUser is Offline
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11 Mar 2015 10:59 AM
joe.ami and geome, thanks a lot.

The text from the form 5695 instructions says:

"Qualified geothermal heat pump property costs. Qualified geothermal heat pump property costs are costs for qualified geothermal heat pump property installed on or in connection with your home located in the United States. Qualified geothermal heat pump property is any equipment that uses the ground or ground water as a thermal energy source to heat your home or as a thermal energy sink to cool your home. To qualify for the credit, the geothermal heat pump property must meet the requirements of the Energy Star program that are in effect at the time of purchase. The home does not have to be your main home."

My concern about the water heating and storage stemmed from the fact that this text only mentions heat or cool "your home". However, in the past (2009 right?), geothermal heat pumps that didn't have/use a desuperheater (for heating water) weren't even eligible for the credit, right? So that would indicate that they really want you to use it to heat water and that labor and materials toward that practice qualifies? Is anyone aware of something else that indicates that geo-sourced heating or just heating in general is eligible? joe.ami was there something specific you were getting your opinion from?

(My water tank, an 85 gallon marathon, was about $1000, so the tax break of $300 is not just change to me.)

Thanks again.
rwgardnerUser is Offline
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11 Mar 2015 11:02 AM
Posted By joe.ami on 11 Mar 2015 08:39 AM
If you can't fix stupid, you probably can't fix government.


Heheh. I don't think you'll get any arguments on that one...
LoobyUser is Offline
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11 Mar 2015 12:08 PM
IMO, you're massively overthinking it. The 5695 instructions are
entirely ambiguous, and the 5695 form itself doesn't ask for any
cost-breakdown details. There's just one line to enter the total
amount you spent on (ambiguous) geo-stuff.

Thought experiment: Imagine yourself as a clueless technophobe
who hires "Joe's HVAC" to sell you green heating. "Joe" just quotes
an all-inclusive price, and you pay it. "Joe" ain't a tax accountant,
but mumbles sumpin' about 30% IRS credit. So, what do you do?

...well-managed ignorance is sometimes a valuable commodity,

Looby

One measurement is worth a thousand expert opinions.
rwgardnerUser is Offline
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11 Mar 2015 10:17 PM
Indeed ignorance can be valuable, maybe no where more than with taxes, but fortunately or unfortunately I'm not ignorant and believe I should do my best to be informed. I hate paying taxes, and think 80% of them or more go to waste, but no one else likes paying them either. I don't want to put unnecessary burden on them.

joe.amiUser is Offline
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12 Mar 2015 07:13 AM
My opinions are just that. The IRS tried to muddify when they excluded auxiliary heat and duct systems but they didn't exclude significantly more expensive radiant systems. While your water heater is purchased with the geo, is it really part of the geo? Perhaps if you used it as a buffer tank for a orange box store 50 gallon electric and re-piped it later.....
Joe Hardin
www.amicontracting.com
We Dig Comfort!
www.doityourselfgeothermal.com
Dig Your Own Comfort!
rwgardnerUser is Offline
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12 Mar 2015 10:04 AM
Not sure I follow you, joe.ami.

To clarify, the tank installed with the geo job is just a buffer/storage tank. I'm still using my previously-existing water heater.
LoobyUser is Offline
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12 Mar 2015 11:55 AM
Posted By joe.ami
Finally we run promotions all the time that offer a
free water heater with the purchase of a geo system.

Wouldn't the IRS consider that to be taxable as ordinary income? :)

...nuthin' in TheRuleBook sez it has to make sense,

Looby

One measurement is worth a thousand expert opinions.
joe.amiUser is Offline
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13 Mar 2015 08:13 AM
The tank installed with the geo or buffer tank- if unpowered is "renewable".
Joe Hardin
www.amicontracting.com
We Dig Comfort!
www.doityourselfgeothermal.com
Dig Your Own Comfort!
rwgardnerUser is Offline
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16 Mar 2015 06:50 PM
Does "renewable" have a tax advantage in itself? (I haven't seen anything about that.) Thanks.
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