Financial Incentives and Grants
Installing a ground source heat exchanger may qualify you for federal, state and local utility incentives.
Highlights
Federal Income Tax Credit Amount and Maximum Cap:
A business can claim a tax credit equal to 10% of its spending on eligible geothermal system property. The tax credit can be used to offset both regular income taxes and alternative minimum taxes (AMT). If the tax credit exceeds the income tax liability, the loss can be carried back one taxable year and any remaining balance can be carried forward into future years.
Accelerated Depreciation:
Ground Source Heat Exchange Systems (GSHEX) can use the Modified Accelerated Cost Recovery System (MACRS) deduction to offset the initial installation costs for both the interior equipment and the exterior well field. If the system is installed prior to 12/31/2012, the entire sum can be taken the first year, otherwise 50% may be taken on year one and the remainder over the next 4 years. All GSHEX systems are eligible starting on 10/03/2008 through 12/31/2016.
Additional Tax Incentives Available to Ground Source Heat Exchanger Purchasers
Energy-Efficient Buildings Deduction
Section 179D of the Internal Revenue Code provides a tax deduction of up to $1.80 per sq. ft. to owners, or if government-owned, designers, of new or existing commercial buildings that achieve a 50% annual energy cost savings compared to a reference building that meets the minimum requirements of ASHRAE Standard 90.1-2001. The savings are determined from the combined heating, cooling, hot water and lighting use. If the full savings is not achieved, a partial deduction of up to $.60 per square foot can be taken for a heating, cooling, and hot water system that provides at least 1/3 of the required 50% annual savings. The energy savings is determined by a calculation using “qualified” software that is certified by a “qualified” individual. See IRS Notices 2006-56 and 2008-40 for details. The tax deduction is limited to the actual spending for the energy efficient commercial building property, or $1.80 per sq. ft., whichever is less. The property must be placed in service from January 1, 2006 through December 31, 2013.
Please consult a tax professional for how to take advantage of this and any other tax credit. Pioneer does not recommend or endorse any financial strategy.
Resources
For more information on federal, state and local utility incentives, please visit: