Thursday, May 28, 2009

Substantial Energy Credits — Continued

Geothermal credits

Quote from the IRS…

“Residential energy efficient property credit. Beginning in 2009, there is no limitation on the credit amount for qualified solar electric property costs, qualified solar water heating property costs, qualified small wind energy property costs, and qualified geothermal heat pump property costs…”

Geothermal energy systems are based on the earth being a constant temperature once you get about 10 feet below the surface of the ground. If you can capture that heat, and run it through a heat exchanger, you can heat your home for essentially the cost of running a fan. You also can cool your home in summer with the same system and get hot water as a bonus. Couple it with a solar energy system to generate the electricity and you can substantially reduce your carbon footprint. It works best with a forced hot air heating system.

All in all this is not a bad deal.

Last year I talked with a company that installs residential geothermal energy systems. Part of my conversation with them was a question about tax credits and the response was “there aren’t any”. That changed in February when the stimulus package was signed. Now you can get 30% of the installation cost of a geothermal energy system back in the form of a federal tax credit. And there is no limit how much your credit can be. Just remember you still pay for 70% of the cost of the system.

Like the other energy credits, you use Form 5695 to claim this one. This is not a refundable credit so you need to have a substantial tax liability to take advantage of the credit.

Here are some links that explain more:

This one is from the Union of concerned Scientists:
http://www.ucsusa.org/clean_energy/technology_and_impacts/energy_technologies/how-geothermal-energy-works.html

This is from Wikipedia:
http://en.wikipedia.org/wiki/Geothermal_heating

Here is a link to a government website where you can search for grants.
http://www.grants.gov/

There are plenty of additional links on Google or any other search engine.

2 comments:

Cathryn said...

Hi, Thom. I missed the earlier blog where you said you were very sick. I hope it's all better now and wasn't lyme or swine... You asked for questions earlier; here's mine. For decades we made after tax IRA contribution, not taking a deduction. Now we've learned we should have been filing a form with the IRS all along so they won't tax us on the money when we withdraw the money, and there could be a penalty if we file these forms late. Do you know what kind of documentation they need? (We must have started contributing in the early 1980s and have no financial statements from then, but do have our 1040 showing we took no tax deductions for IRA contribution.)

Thom said...

HI Cathryn

I will post a blog in the next week to answer your question. Until then, don't worry.

And thank you for your get well wishes. Luckily it was only pneumonia rather than swine flu.

thom