FAQ
Q: How does the tax credit work?
A: The Energy Credit
In October 2008, geothermal heat pumps were added to section 25D of the Internal Revenue Code. This created
a 30% tax credit for costs associated with qualified geothermal equipment “placed in service” through the end
of 2016. Property is usually considered to be placed in service when installation is complete and equipment is
ready for use. However, if the system is part of the construction or renovation of a house, it’s considered placed
in service when the taxpayer takes residence in the house.
• 30% of total system cost
• No limit to credit amount for 2009 and beyond
• Can be used to offset AMT tax
• Can be used in more than one year
• Can be combined with solar and wind tax credits
• Can be combined with energy efficiency upgrade credits
Q: What’s Eligible
A: Geothermal equipment that uses the stored solar energy from the ground for heating and cooling, and that
meets Energy Star requirements at the time of installation is eligible for the tax credit. Covered expenditures
include labor for onsite preparation, assembly, or original system installation and for piping or wiring to connect
a system to the home. The structure must be located in the United States and used as a residence by the
taxpayer, although primary residency isn’t required. In fact, if geothermal is installed in more than one home,
there’s no limitation on the number of times the credit can be claimed.
Q: What’s Not
A: The credit can’t be claimed for spending on equipment used solely for hot tub or pool conditioning, nor on
previously used equipment.
Q:
How to claim the Credit
A: Use IRS Form 5695 (2008) to claim the Residential Energy Efficient Property Credit for 2008. Form 5695 for
2009 has not been published yet. For systems completed in 2008, the maximum tax credit is capped at $2,000.
For property placed in service after the start 2009, there’s no limit on the credit amount. The tax credit can be
used to offset both regular income taxes and alternative minimum taxes (AMT). If the federal tax credit exceeds
tax liability, the excess amount may be carried forward into future years. Spending on geothermal heat pump
property adds to your home’s cost basis, but also must be reduced by the amount of the tax credit received.
Q: What are the components of a GeoThermal system?
A: Three main components create the system: a heat pump unit, a ground loop (open or closed) and an air delivery system (your home's ductwork).
Q: How long will the system last?
A: With fewer mechanical parts on a GeoThermal system most units have a life expectancy in excess of 20 years!
Q: How efficient is a GeoThermal system?
A: Sisler GeoThermal units have efficiency ratings of up to 5.3 COP and 31.1 EER.
Q: Is the system safe?
A: Units require no pilot lights, open flames or combustible gases to endanger your family.
Q: Will my home maintain a comfortable temperature?
A: The GeoThermal system moves a higher volume of air than conventional systems resulting in a comfortable temperature in your home without hot or cold spots.
Q: How much will I save with a GeoThermal system?
A: A GeoThermal system reduces costs and saves you up to 70% vs. electric resistance heat, 65% vs. fossil fuels and 50% vs. air source heat pumps.
Q: Is the GeoThermal unit harmful to the environment?
A: Most definitely not! In fact, the EPA has determined GeoThermal systems offer the most environmentally friendly technology available today!
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