How to Claim the Geothermal Tax Credit Extension
A bill was recently passed in Congress that included the reinstatement of the geothermal tax credit. That means that Congress has extended the tax breaks for clean energy up to 30 percent. This bill will specifically extend federal credits for both commercial and residential installation of geothermal heat pumps. There are several steps you need to take to claim your geothermal tax credit. You'll find that going green is actually more affordable and will put more cash in your pocket.
Clean Energy Tax Breaks Extended
The Geothermal Energy Organization (GEO) joined a coalition of transportation, energy and business leaders to fight for clean energy tax credits. The federal tax rebate for geothermal was recently reinstated on February 6, 2018. Homeowners who bought a geothermal heating, cooling and hot water system from January 1, 2017, until now will qualify for the 30 percent tax credit.
There are several important dates to keep in mind regarding the tax credit. These tax breaks will continue to be at 30 percent until December 31, 2019. By 2020 the tax credit will start to phase out by dropping to 26 percent. In 2021 it goes down to 22 percent, and will expire on December 31, 2021. There is also a 10 percent tax credit available for commercial construction until December 31, 2021. It's important to note that this particular tax credit is retroactive.
Why Geothermal Tax Credits Are Important
Geothermal energy offers a cost-effective and environmentally friendly method of heating and cooling your home. Using solar heat from the ground, a geothermal heat pump can save you 30 to 70 percent on your heating bills. While you'll save money in the long run, the initial cost of installing a geothermal heat pump can be high. That is why geothermal tax credits are extremely important.
With tax credits, you can help offset the initial cost of installing a geothermal energy system in your home. Once an energy-efficient heating and cooling system has been installed, you can enjoy the benefits for years to come. These benefits include high efficiency, few fluctuations in cost, a long lifespan for components and an environmentally friendly source of energy that takes a limited amount of space in your yard.
Include Form 5695 in Your Tax Return
Make sure to file the 5695 federal tax rebate when filing your tax returns. In order for the rebate to apply, there are a few stipulations:
- Home ownership – You are required to own the home with the energy components to receive the rebate.
- Home completion – The home can't still be under construction; it must be fully completed.
- Home residence – The home you claim must be your primary residence and not a vacation or secondary home.
- Home receipts – Make sure to include all your receipts for your geothermal installation from January 1, 2017, to the present time.
When filing, there are a few final tips to keep in mind:
- Installation costs-- According to 20 Something Finance, the tax credits include labor on the installation.
- Future filings -- Even though the credits are non-refundable, they can be carried over to the next tax year.
- Energy criteria -- The geothermal heat system must meet Energy Star criteria at the federal level.
Don't miss out on this great opportunity to save money on your tax return. When building your dream home, you need a company that can provide you with a beautifully designed home as well as innovative energy solutions.
High Performance Homes (HPH) has proven experience building Zero Energy Ready Homes to the highest standards using energy-efficient building techniques. HPH can also assist you in completing your 5695 form. They can take all eligible items into consideration for your rebate. It's important to always consult with a tax professional as well. Contact HPH for more information.
Leave a Reply
Your email address will not be publsiehd. Requried fields are marked *