Geothermal, Insulation, and Windows in the Same Package?

Discussion in 'Tax Credits, Rebates and Incentives' started by hren, Jul 19, 2011.

  1. hren

    hren New Member


    We have just installed a 3-ton geothermal system (they are completing the work today) and the same company also did spray foam the attic and crawl space. We will also be blowing insulation in the walls and replacing the windows - the transaction will go through the same company who will also do the installation of the windows.

    Now, here is a question: Does anyone have experience with filing taxes and getting the 30% tax credit on the entire package (geothermal, insulation, windows)?

    A bit of background. We have a 3500 sq feet house built in 1957 with inadequate insulation in the attic, no insulation in the walls and older leaky windows. If we did not do any improvements, we would need a 5-ton system. With all the improvements, we have a 3-ton system. In other words, we paid $29,000 for just the 3-ton system and we would have ended up paying around $40,000 for a 5-ton system (the increase is largely due to extra drilling cost). Is this a good argument for the Feds to have the entire package with 30% tax credit?

    Also, after new windows the total cost will be more like $50,000, which is more that what we would have paid for a 5-ton system. Would claiming $50,000 be unreasonable and should we instead claim $40,000 (a comparable cost of the 5-ton system)?

    Thank you for all advice!
  2. ChrisJ

    ChrisJ Active Member Forum Leader

    I don't think the IRS considers things like "What I would have paid".

    My situation was new construction, so it is different then yours. I did not include windows and insulation. To me it was not part of the geo system.

    My answer would be $29,000.00. Sorry

  3. Sound Geothermal

    Sound Geothermal New Member

    The actual application of the incentive is "geothermal propperty". You can claim what you like. The question is: "Will they audit?". I would suggest that the extra insulation and windows enhances your "geothermal property". i.e. makes it smaller and less expensive but with enhanced savings. You win on both counts; reducing energy loss and consumption.
  4. jake72

    jake72 New Member

    Along these lines, does ductwork on a geothermal system qualify for the 30% tax credit?

    I'm building a new house and installing a geothermal system.

    Thanks for your help,
  5. ChrisJ

    ChrisJ Active Member Forum Leader

    Yes Jake,

    Ductwork is included because it is part of the delivery system. I have radiant in slab also so that was included.

  6. jake72

    jake72 New Member

    Thanks for the info, Chris. That's good to know!
  7. JFLame

    JFLame Member

    I'm digging this topic up to see if anybody has gotten any better guidance on what is allowed to qualify for the tax rebate.

    From what I gather, this is pretty much a given:
    1. The geo heat pump, any ducting, electrical, water heaters, plumbing, etc.
    2. Drilling costs

    What about costs to re-landscape your yard after the drillers tear it up? I imagine that's in as well.

    Now, to get to the grey areas - I was told by my installer that if I insulate my basement my heating needs will go down. Does insulating the basement perhaps fall into this? Along that same line, what about if I install radon mitigation so I can insulate said basement and make it conditioned space as part of the install (basement "zone")?

    Has anybody heard of any issues if you try and claim these potentially related costs on your tax return?
  8. ssmith

    ssmith Member

    It's all pretty well explained on the IRS form (5695) here:

    Qualified geothermal heat pump property costs. Qualified
    geothermal heat pump property costs are costs for qualified
    geothermal heat pump property installed on or in connection with
    your home located in the United States. Qualified geothermal heat
    pump property is any equipment that uses the ground or ground
    water as a thermal energy source to heat your home or as a
    thermal energy sink to cool your home. To qualifiy for the credit, the
    geothermal heat pump property must meet the requirements of the
    Energy Star program that are in effect at the time of purchase. The
    home does not have to be your main home.

    Insulation goes in section 1 of the form, geo equipment in section 2, Different credits.

    As far as landscaping to repair the property damaged by the geo installation, that's all part of the installation.

    I am not an accountant or installer, but that's how I read the rules...pretty cut and dry.
  9. JFLame

    JFLame Member

    Question: would an upgraded standby generator in order to allow operation of the geothermal system qualify for the tax credit?
  10. Bergy

    Bergy Member Industry Professional Forum Leader

    I doubt the IRS would consider that part of the geothermal install.

  11. JFLame

    JFLame Member

    I would think that standby generation, which is crucial to system operation would qualify. It's the same logic as if you needed to do electrical work to install the system.

    I think this tax credit has an immense grey area.
  12. urthbuoy

    urthbuoy Well-Known Member Industry Professional Forum Leader

    Not my expertise

    But I'm doubting the backup generator is going to be solely for the geo. That's how I'm guessing they'll look at it as well.
  13. JFLame

    JFLame Member

    And things like zoning and new hot water heaters are? Nobody seems to question those items, and they are clearly NOT required to install a geo heat pump.
  14. urthbuoy

    urthbuoy Well-Known Member Industry Professional Forum Leader


    But I didn't think it is me you need to convince.

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