We were pretty disappointed when, in 2016, congress extended tax credits for solar energy systems but left out geothermal HVAC systems. However, earlier this year, a law was signed into effect that extended over thirty tax incentives, including federal tax credits for residential and commercial installations of ground source heat pumps (GHPs). The reinstated GHP tax credits are retroactive to January 1, 2017, and extend to January 1, 2022. While the rules for the credit are essentially the same as before, there is an important change: a new clause allows commercial projects to be in progress at the end of the tax period, rather than having to be in service.
These credits provide a 30% tax saving on residential projects, and a 10% saving on commercial projects. However, more important than that 10% is the accelerated depreciation on the geothermal HVAC system. While the 10% certainly helps, it doesn’t get over the first-cost hurdle. That’s where we look to unique financing vehicles, such as PACE (Property Assessed Clean Energy), where the cost is assessed to the property and financed over a term of up to twenty years.
We’re so excited that congress has recognized the importance of geothermal HVAC, and is encouraging its growth across the country with these tax incentives. We have helped sustainable projects earn back hundreds of thousands dollars in tax credits and rebates, and look forward to doing even more going forward. If you have a geo project that you need help financing, or simply want more information, click here, and one of our geo experts will get in touch with you!