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Federal Tax Incentives for Commercial Geothermal Units

In 2008, geothermal heat pumps were included in section 48(a) of the Internal Revenue Code under “energy property,” creating a 10% tax credit for costs associated with geothermal equipment “placed in service” through 2016. Benefits of this tax credit include:

•10% of total system cost with no limit

•Use credit to offset both regular and alternative minimum taxes (AMT)

• Use credit over multiple years

•10% grant available in lieu of tax credit

•Combine with solar and wind tax credits

•Combine with energy-efficient building deduction

•Geothermal systems put into service between 2008 and 2009 are eligible for a special 50% “bonus” 1st year depreciation

•Energy property may also be eligible for the section 179 deduction, allowing small businesses to write-off 100% of the purchase price the year a geothermal unit was bought

Tax Credit Eligibility

1.     Your building must be located within the United States

2.     Original use begins with taxpayer

3.     The Geothermal Heating and Cooling Unit must be installed between 10/3/2008 and 12/31/2016

Energy Efficient Commercial Buildings Tax Deduction

A tax deduction of $1.80 per square foot is available to building owners of new or existing buildings who install the following equipment that reduces a building’s total energy and power cost by 50% or more in comparison to minimum requirements set by ASHRAE Standard 90.1-2001.

  1. Interior lighting
  2. building envelope
  3. heating, cooling, ventilation, or hot water systems that reduce

Deductions of $0.60 per square foot are available for lighting, building envelope, or heating and cooling systems that provide at least 1/3 of the 50% savings target.

Additional Information

• IRS Publication 946 provides guidance on the section 179 deduction and how to depreciate property

•In order to claim this tax credit, you will need to fill out IRS form 3468

•Energy savings must be calculated using software approved by the IRS

•While deductions are available primarily to building owners, tenants may be eligible if they make construction expenditures.

If you have any questions about Commercial Geothermal Heat Pumps or Tax Incentives, please contact Fresh Air Concepts by calling 1-800-708-4FAC or click here today!

Fresh Air Concepts specializes in Heating, Air Conditioning, and Air Purification in both residential and commercial applications for the Maryland Area.

Superior customer service is and always will be our #1 priority. Fresh Air Concepts promises to provide you with highly qualified and professional, heating, air Conditioning, and air purification technicians.  And remember, we are an award winning, factory authorized Carrier dealer!

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Federal Tax Incentives for Commercial Geothermal Units

This entry was posted on Friday, January 20th, 2012 at 9:15 pm . You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.

Fresh Air Concepts
5195 Raynor Ave Linthicum Heights, MD 21090
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