Haven't seen that in any of the act. I'd imagine a number of installers would wind up with zero tax liability for the year.

I haven't run across this myself Clark but you certainly have my attention.  If you could point me towards what you were reading, I would like to take a look at it and see if I can flush this out.  This is a pretty big deal if it's true.

General Question...New to this so be easy on me. We are trying to get started on a new house, which is way more difficult than expected. We are farmers/ranchers so our new home will have acreage, house, shop, livestock barn and facilities as well as water well and septic. The only thing on site is elec. and lots of mother narure. To say we are on a budget is an understatement. I wanted to build an ICF house, but really had a hard time making the numbers fit. Right now we are using an agrcultural barn for the house with cool metal roof and siding and sealing the envelope with Icynene. The house will be on a slab and I am set on radiant heat. After all things considered, is the geothermal system feasible or not. I did get a quote and it seemed very expensive. The HVAC guy suggested we plan the geothermal system in so he could install it at a later date without too much trouble. With a radiant heat system is the geo system over board? We live in SW Kansas, not far from Greensburg. We have a storm shelter incorporated into a small basement in the house. Any ideas are greatly appreciated. Thanks Brandee

Not sure what that has to do with the tax credit, but the simple way to find out is get at least 3 quotes for the system, and have them include the estimated operating cost of the system versus whatever else you would have installed. Typically if you have the system included in your mortgage payment, the payment plus heating /cool /hotwater cost with geo will be less than mortgage +heating/cooling/hotwater with something else. It's not absolute so that's why you need to get estimates that include operating costs.
Every area of the country has differences in cost based on any number of factors such as competition of competent contractors, equipment expenses including operation, and even things specific the the exact site you're building on. Get the quotes to get started.

Some of the signs of a competent installer are -
he/she will measure the building including windows and note window facing direction
at time of quote the person gives you calculations, that do not include I multiplied the sq. ft by this to get to a tonnage
the calculations shows a BTU / hr requirements for 96% or so of the heating cooling season
the person recommends a system that strictly matches those conditions, not over or undersizes (hey that's how I do it when I install normal hvac!)

I have been looking into this for some time and was happy to hear it finally passed. My only problem is that we installed our system in March of 2008, and my reading of the credit on the energy star website says it only applies to systems that go into service after Jan 1 of 2009. Say it ain't so!!!!!!

I've taken a look at the actual text of the document, and I disagree with Energy Star's posting of it. Take a look at dsire

Senecarr...looks like you are right...and you made my day! I was a little disappointed to read the energy star site, but the federal site you directed me to does say this:

Geothermal heat pumps
Maximum credit of $2,000.

Systems must be placed in service from January 1, 2008, through December 31, 2016.

The geothermal heat pump must meet the requirements of the Energy Star program which are in effect that the time the installation is completed.

In case of joint occupancy, the maximum qualifying costs that can be taken into account by all occupants for figuring the credit is $6,667. This does not apply to married individuals filing a joint return. The credit that may be claimed by each individual is proportional to the costs he or she paid.

The home served by the system does not have to be the taxpayer’s principal residence.

Thank you so much!
Kelly

There is a lot of mixed media regarding the energy tax credits. I have read the law and it seems to support that if a Geothermal system is placed in service from January 1, 2008, through December 31, 2016, then will qualify. Energy Star states that the credits do not come into effect until Jan 1, 2009. However, curious about all this I placed a call to the IRS today to see if one of their agents (being that they are experts...haha) could help me sort this all out. The Agent I spoke to told me that the Energy star website was indeed correct. Which raised my blood pressure and confused me further. Then, I went to the international ground source heat pump association's (IGSHPA) website to see if there was any insight to be shared there. There wasn't but, the president of IGSHPA was quoted in the OK newpaper stating that it is indeed retroactive to include all of 2008. Another conflicing (climatemaster.com) states that the bill is only active from 10/3/2008 to 12/31/2016. I want to provide my customer's with the best information possible and all of this is conflicting. Someone please help!!!!

It's confusing to me too.  This is what I found on the US Congress web site where the law is posted.  http://thomas.loc.gov/cgi-bin/query/F?c110:6:./temp/~c110InTEfn:e138223: 


SEC. 105. ENERGY CREDIT FOR GEOTHERMAL HEAT PUMP SYSTEMS

(b) Effective Date- The amendments made by this section shall apply to periods after the date of the enactment of this Act, in taxable years ending after such date, under rules similar to the rules of section 48(m) of the Internal Revenue Code of 1986 (as in effect on the day before the date of the enactment of the Revenue Reconciliation Act of 1990).

This indicates it was effective the day the bill was signed into law by the President...I think.

However, in SEC. 106. CREDIT FOR RESIDENTIAL ENERGY EFFICIENT PROPERTY it says,

(d) Credit for Geothermal Heat pump Systems-

(f) Effective Date-

(1) IN GENERAL- Except as provided in paragraph (2), the amendments made by this section shall apply to taxable years beginning after December 31, 2007.

This indicates it is effective from January 1, 2008 going forward.  Leave it up to Congress to keep us in a state of confusion. 

Maybe someone else can pitch in with some insight.

That part of it is the residential energy efficiency credit. DSIRE mentions it too.

The efficiency credits begin again in 2009 tax years.

Geothermal follows under the renewables tax credit along with solar and wind. The renewable energy credit is for the 2008 tax year / any installs between Jan 1 2008 through the end of the year. The oddity on the renewables sections is solar tax credits are good for 2008, but in 2009 and beyond they have no cap on the 30% you take on it, so some people are not "officially" using their installed solar PV's for anything besides "testing" until January 1st. Hate to be an electrician who does solar installs on Jan 1.

My parents are building a house this year that will have geothermal heating & cooling. The house will not likely be completed by 12/31, for them to qualify for this credit does the entire geothermal system need to be installed, or can they use it to apply the amount they have spent on the system thus far, or does the house need to be finished?
Thanks in advance for the insight.

You claim the credit for the year that the equipment was put into service. If the house will not be done, than the unit is not in service. They would claim the credit on their 2009 return instead.

Can anyone give a summary of what the requirements are for a geothermal system to qualify for the tax credit? I.e., does it have to provide all the heating for a home?

What about if you also have gas/electric backup/auxillary heat? Fireplace/woodstove?

What if you install one to service a substantiall addition but the old house still has a gas or electric furnace?

What if you have a basement but only size it to condition the main floor and not the basement?

Where can I find the details on what qualifies?

No, it does not have to provide all home heating, it just has to be put into service. Electric back up is almost always there with geothermal. So long as the unit is there. Technically, you could install the unit and never turn it on and you'd be eligible for the credit. Of course, if you had a geothermal system installed and didn't use it, I'd be inclined to ask WTF? Additions are fine. It can't be used to heat a pool. Otherwise, I believe the requirements don't even require the installation to be your primary residence. Again, it doesn't have to heat the whole house, or be the only heating device. Keep in mind, it's being meshed with Solar PV, and Wind power as renewables. Nothing requires you power your whole house solar for the credit (in fact, I think the solar mandates you grid tie your solar system).

Thanks Senecarr,

I hate reading raw legislation and trying to figure out what it means.

So is there a limit to how many times you can take the credit? I'm building a large addition and will likely put a separate HVAC system in the addition. If I put in a geo unit in the addition in 2009 and claim a $2000 tax credit can I upgrade the HVAC in the rest of the house to geo in say 2011 and claim another $2000 credit? Or if I sell this place a couple years after taking the credit and buy a new house can I get the credit again for installing geo on the next house?

If I get win the lottery and buy a summer home can I claim a $2000 credit for a geo install on my primary residence and another $2000 for a geo install on my summer home?

Nothing in the language of the law seems to limit how many times you can take it, other than once per year (ie it looks like you couldn't put in two systems in 1 year and claim $4000, but it looks like you could install the second unit the next year and claim it again). I can't be completely sure until I see IRS form instructions though.

Actually givin the cost of installing a Geothermal System, 2k tax credit is a joke. It really should be at least 5k to be much of an incentive.  

Th 2005 Energy bill included a $3,000 renewable energy rebate for the purchase of solar PV ($3,000), geothermal ($2,278), solar hot water ($717) and wood stoves ($425) and DOE was charged with estimating how much money Congress should appropriate to fund this rebate.

DOE's Energy Information Administration reported to Congress in early 2006 that the $2,278 rebate for geothermal would increase annual sales from 35,000 units to 170,000 units in the first year and cost the federal government $387 million.  By contrast, solar PV, with the $3,000 rebate, would increase unit sales from 3,000 units to 12,500 in the first year and cost the federal government $37.5 million. 

The message to Congress was that all geothermal needed to take off was a little push.  It has one now.  The unanswered question is how well unit sales will perform in this economic climate.

I would think the fact that it's on their with the energy efficiency rebates is probably part of the increase in units, just based on advertising. Most people have already seen or know what a solar cell is. I don't think geothermal has anywhere the recognition. Considering most cases I've heard of on here have a 10 year payback or less, beating solar for sales isn't that hard. I think most solar installs (not to confuse by calling it solar systems) have paybacks more in the 20 year range. Most people just don't have the long sightedness to for that kind of thing (or the cash to hang on to).

If it hasn't been mentioned yet the "meets Energy Star requirements" language will apparently cover units that meet the criteria but didn't pay for the cute sticker. That is 14.1 EER/3.3 COP closed loop or 16.2 EER/3.6 COP for open.
J