There’s no shortage of compelling reasons why a geothermal heat pump makes a great addition to your home HVAC system. While the initial installation costs can be prohibitive for many homeowners, federal tax credits are available to offset this expense and provide a faster return on your investment. In fact, some homes have been able to recoup their initial costs in as little as five years.
HOW DO GEOTHERMAL TAX CREDITS WORK?
Federal tax credits cover up to 30% of the cost of installing a geothermal heat pump on your property. In order to qualify, your unit must meet certain minimum criteria:
- Closed loop water-to-air heat pumps must have an EER (energy efficiency ratio) of 17.1 or greater and a coefficient of performance (COP) or 3.6 or more.
- Open loop water-to-air heat pumps must have a minimum EER of 21.1 and a minimum COP of 4.1.
- Closed loop water-to-water heat pumps require an EER of 16.1 or more and a minimum COP of 3.1.
- Open loop water-to-water heat pumps must have an EER of at least a 20.1 and a COP of no less than 3.5.
- Direct expansion heat pumps require an EER greater than 16 and a COP greater than 3.6.
Don’t know the EER or COP ratings of a given heat pump? All ENERGY STAR certified appliances qualify, so be sure to look for the logo when shopping for a new unit.
APPLYING FOR TAX CREDITS
Provided your heat pump meets these minimum specifications, the process of applying for a geothermal tax credit is simple. Keep all receipts from the purchase and installation of your geothermal unit and submit them when it’s time to file your taxes. You must also submit Form 5695, the Residential Energy Tax Credit.
As Elizabethtown’s geothermal installation experts, Home Climates is available to answer any questions you may have about tax incentives for installing a heat pump on your property. In addition to selling and installing heat pumps, we can help you apply for geothermal tax credits in Lancaster, Harrisburg, Lititz, Mount Joy, Hershey and throughout the central PA region. Contact our office today to learn more. We also have resources on how geothermal systems work.