Residential Energy-Efficient Property Credit

The Bipartisan Budget Act of 2018, signed in February 2018, reinstated the tax credit of geothermal heat pumps to § 25D of the Internal Revenue Code. A breakdown of the tax credit amount for installation dates are shown below:

Significantly, The American Recovery and Reinvestment of 2009 repealed a previous limitation on the use of the credit for eligible projects are also supported by “subsidized energy financing.” For projects placed in service after December 31, 2008, this limitation no longer applies.

Eligible Geothermal Heat Pump Property

• Home must be located in the U.S.
• Does not have to be your main home
• Includes “dwelling unit” defined as a house, apartment, condominium, mobile home, boat or similar property, and all structures or other property appurtenant to such dwelling unit
• Geothermal heat pump must be Energy Star® qualified
• Installed between 1/1/2017 and 12/31/2021

Learn more here: Federal Tax Incentives – Expires 2021

Placed in Service Requirement

The IRS defines “placed in service” as when the property is ready and available for use. It’s not when you purchase the product, but the day the installation is complete, and you are able to use your new product.

Claiming the Credit

IRS Form 5695 is used to claim the Residential Energy Credit. Links to the form and pertinent reference documents are below:

• About Form 5695
• IRS Form 5695 Instructions
• IRS Form 5695
• Manufacturer’s Certification of Geothermal Heat Pump Property Compliance (ClimateMaster)
  

Additional State and Local Geothermal Energy Tax Incentives Available

Check with your your state and local governments! There may be additional incentives for installing a ClimateMaster geothermal heating and cooling system. Visit the DSIRE Website (link below) shown below to find out if there are state and local residential energy tax credits available in your area..

NOTE: Once you reach the DSIRE Website, simply select “Geothermal Heat Pumps” from the “Technology” drop down menu and then click on your state to view all the programs or energy credits available for geothermal heat pumps in your state.