New Federal Tax Incentives for Geothermal Systems
(Oct. 8) Commercial (and residential) building owners who install geothermal heating and cooling systems are now eligible for federal-tax incentives under the Energy Improvement and Extension Act of 2008, passed by Congress on Oct. 3 as part of the economic recovery package.
The Energy Improvement and Extension Act offers a one-time tax credit of 30% of the total investment for residential ground loop or ground water geothermal heat-pump installations, with a maximum credit of $2,000 for a single residence. The legislation also provides a credit of 10% of the total investment, with no maximum credit, for commercial system installations.
“We believe this incentive will encourage many more homeowners and business owners to install geothermal heat pumps,” said Tim Shields, chairman, WaterFurnace International, a leading manufacturer of residential, commercial, industrial and institutional geothermal and water-source heat pumps. “Geothermal heat pumps are made right here in the United States and the machines used to put the renewable heat exchangers in the earth are all made right here. This is truly a homegrown solution to the energy crisis and a very good way to address the financial crisis at the same time.”
The tax credit for commercial buildings begins with systems installed after Oct. 3. Owners can file for the credit by completing the Renewable Energy Credits subsection on their 2008 tax-return forms. No proof of purchase is required. However, in case of an audit, owners are encouraged to keep a detailed invoice of their purchase on file.
Geothermal systems tap the free, renewable supply of solar energy stored just a few feet below the Earth’s surface, and use that energy to drive heating and cooling systems in both commercial and residential buildings, according to WaterFurnace. In addition to utility, state and now federal tax incentives that enhance the affordability of geothermal systems, this cost-effective, environmentally friendly technology offers a host of benefits, according to WaterFurnace, including:
- Free, renewable supply of solar energy;
- Efficiency ratings up to five-times higher than those of ordinary heating and cooling systems;
- Savings on utility bills up to 70%;
- Reduced carbon footprint since the system burns no fossil fuels;
- More even distribution of heating and cooling for improved comfort;
- Improved indoor air quality;
- Quiet operation with no noisy outdoor units to disturb the environment or neighbors;
- Safe operation that requires no open flame or fuel storage tanks;
- Less maintenance; and
- Increased system longevity (an average life span of 24 years vs. 15 years for conventional air conditioners and 20 years for fossil-fuel furnaces).