16 Apr What is the Bipartisan Budget Act of 2018? How does it affect me?
In February of 2018 federal legislators signed the Bipartisan Budget Act of 2018. This act reinstates the personal tax credits of the Energy Improvement and Extension Act of 2008. While the most recent act applies to several sources of home energy, one of the most prominent for the Southern Idaho area is geothermal heat pumps. A geothermal heat pump is a heating and cooling system that pulls water out of the ground, runs it through a unit treating the air to condition the home, and puts it back into the aquifer through either a drain field or an injection well. Geothermal heat pumps work year round due to the fact that the water in the ground is a constant temperature.
What makes a geothermal heat pump appealing?
Geothermal heat pumps are extremely efficient when it comes to the amount of air conditioned vs the energy it takes to condition those units of air. They also take far less maintenance and the mechanics have a longer life span. The downside to geo heat pumps however, is that they cost more up front to install. All of the people on the project including the home owner, the general and HVAC contractors and your water professionals have to be on the same page when it comes to the heating/cooling system, its water requirements, and how the system is to be installed. While most HVAC contractors lean to installing a drain field, injection wells often provide better benefits in returning the water back to the aquifer while requiring less maintenance and better protection of the natural resource.
What are the Tax Credits and how do they work?
Home owners can claim up to a 30% credit for all qualifying expenditures pertaining to the system. These credits apply to federal income taxes and can be carried over until they are exhausted. Some of the expenditures include but are not limited to: the well and pumping system, plumbing inside the home pertaining to the system, electrical wiring for the system, the actual geothermal water to air unit, and the injection system for discharging water.
Things to consider for your Geothermal System
Because the main source of the geothermal system is water, homeowners need to give special consideration to the size of the unit and how much water it will require. While most systems do not take the maximum amount of water required to run all the time, understand that those high points of consumption will come on top of the homes general water use. Home owners should work with contractors to ensure that the water system will be able to handle all of the water demands. Homeowners should also work with their water well drilling contractor to make sure the depth, diameter, storage, and volume of the well will be able to provide for the water needs not only now, but as the resource continues to change in the future. When done correctly home owners can insure a long lasting, low maintenance, energy efficient heating and air conditioning system while taking advantage of current tax benefits that certainly will not be around forever.
Whether you are building a new home or simply upgrading your current system, contact us today and let us help you make your home as energy efficient as possible.
*Disclaimer: This is not legal or tax preparation advice. Seek professional assistance in preparing taxes to claim these credits.