Tax Breaks for Ground Loop Systems

With the signing of The Emergency Economic Stabilization Act of 2008, H.R. 1424, the Federal Government has put their money where their mouth is and have acted to make geothermal heat pump systems a more attractive HVAC alternative.



Commercial geothermal heat pump installations now qualify for a 10% tax credit, with no cap on the credited expenditures!

For commercial installations, an ITC is provided for geothermal heat pumps equal to 10 percent of the expenditures, including allocable labor costs for facilities placed in service after October 3, 2008. There is no cap on the amount of expenditures which can be used for the credit (and no cap on the credit itself). In addition, geothermal heat pumps are eligible for Modified Accelerated Cost-Recovery which provides for depreciation over 5 years. The credit is determined by the cost of the system. However, if the equipment is financed by any subsidy program (federal, state or local) or with tax-exempt bond, the basis of the equipment must be reduced by the amount of the subsidy. Contrary to the residential credit, on commercial applications the units do not need to be Energy Star rated to apply. To collect this credit, the taxpayer would need to complete IRS Form 3468. The form will need revision by the IRS to reflect the addition of geothermal heat pumps.

Every little bit helps to get these highly-efficient systems to pencil out. Uncle Sam has lent a hand to owners and designers who wish to utilize this exciting technology!