Federal Tax Credits for Installing Geothermal in Your Home
If you’re considering installing a direct exchange geothermal system in your home, you may be interested to know that the federal government offers tax credits to help offset the upfront costs. In this blog, we will discuss the federal tax credits available for installing geothermal in your home.
What are the Federal Tax Credits for Geothermal Systems?
The federal government offers tax credits to incentivize homeowners to install renewable energy systems in their homes. These tax credits are designed to help offset the upfront costs of installation, making it more affordable for homeowners to invest in renewable energy systems.
The federal tax credit for residential geothermal systems is currently 30% of the total cost of the system. For commercial applications, the federal tax credit can be up to 50% of the cost of the system. For more info about federal tax credits, check out our article here. This means that if your geothermal system costs $40,000 – 80,000 to install, you can receive a tax credit of 30% to 50% of the price of the system.
Who is Eligible for Federal Tax Credits for DX Geothermal Systems?
To be eligible for the federal tax credit for geothermal systems, the system must be installed in a home that you own and use as your primary residence. The home must also be located in the United States.
It’s important to note that the tax credit only applies to new geothermal systems, not to replacement systems or systems installed in rental properties.
How to Claim Federal Tax Credits for DX Geothermal Systems
To claim the federal tax credit, you will need to file IRS Form 5695 with your federal tax return. You will also need to include a copy of the manufacturer’s certification statement that verifies the system meets the efficiency requirements set by the government.
It’s important to keep all documentation related to the installation of your geothermal system, including receipts and invoices, in case the IRS requests proof of eligibility for the tax credit.
How Long is the Federal Tax Credit for Geothermal Systems Available?
The federal tax credit for geothermal systems is available through December 31, 2035. After this date, the tax credit will begin to phase out. In 2035, the tax credit will be reduced to 22%, and eventually go to 0.
The federal tax credit for geothermal systems is an excellent way to offset the upfront costs of installing a geothermal system in your home. With the tax credit currently at 30%, now is a great time to consider installing a direct exchange geothermal system in your home. Remember, to be eligible for the tax credit, the system must be installed in your primary residence and meet the government’s efficiency requirements. Be sure to keep all documentation related to the installation of your system and file IRS Form 5695 with your tax return to claim the credit. To learn more about rebates and tax credits, click here.