2018 is the best time for anyone in South Carolina to install a geothermal heating and cooling system. The reason is simple. Tax Credits.
Installing the System this year will save you 30% on your federal tax bill and the South Carolina State tax credit of 25% is set to expire at the end of 2018.
Federal Tax Credit Renewed Through 2021
Since 2008, the U.S. Federal government has offered a renewable energy tax credit for installed geothermal heating and coolings systems. The tax credit actually expired at the end of 2016, but was reinstated retroactively to January 2017 in a budget agreement passed by Congress in February 2018. The renewed tax credit provides a 30% federal tax credit for systems installed through 2021.
Federal Geothermal Tax Credit Basics
• 30% tax credit
• No Maximum credit
• Does not have to be principal residence
• System must be in process by December 31, 2021.
How the Federal Tax Credit Makes Geothermal a Great Value in South Carolina
Costs of geothermal systems vary greatly depending on the size of your home and the installation of the loop system. For purposes of illustrating the savings from the tax incentive, we’ll use the example cost of installing the geothermal system of $25,000. A system costing $25,000 would not be unusual, but installation could easily cost more or less.
Here’s what your actual installed price will look like after federal tax rebates.
$25,000 System Price
-$ 7,500 Federal Tax Credit
=$17,500 System Price with 30% Federal Tax Credit
South Carolina Home Owners Save Even More in 2018
South Carolina Geothermal Tax Credit Basics
• 25% tax credit
• No Maximum credit
• Must be a residential installation
• System must be in service by December 31, 2018.
Savings by Combining Both Tax Credits
Until the end of 2018, both Federal and South Carolina Tax Credits apply to system installation. Again looking at a $25,000 system install as an example, here is how much you can save in 2018.
$17,500 Cost after Federal Tax Credit
-$ 6,250 SC Tax Credit
=$11,250 Final Cost
By having your geothermal system installed this year in South Carolina, you can save more than half off the total cost of the system, bringing the cost down to what you might pay to install a conventional, but much less efficient HVAC system in the same home.
SC Tax Credits May Not Be Renewed
The political climate and interest among politicians for renewable energy credits have shifted during the past decade. In 2008, the Federal government started offering a 30% federal tax credit for installation of geothermal heating and cooling systems installed in your home. While solar credits were extended, geothermal was left out when it was time to renew the credits at the end of 2016. It took over a year and multiple attempts for bills trying to renew the federal tax credit to pass.
States have also cooled on tax credits recently. North Carolina had a 35% tax credit for geothermal that expired at the end of 2015. Other states have also ended their tax incentives for geothermal, leaving only South Carolina, New Mexico and Montana with tax credit incentives (according to the Database of State Incentives for Renewables and Efficiency). New Mexico’s 10-year tax incentive was put in place in 2010, a different time in the political landscape. Montana’s tax credit is more limited than most that were not renewed, in that it caps savings at $1,500, rather than base it on a percentage of the installation cost. South Carolina has also undergone significant changes in political leadership since the tax credit was implemented under then-governor Nikki Haley.
Why it is important to act quickly
One of the most important requirements for the South Carolina tax credit is that the geothermal heating and cooling system be installed and in service by December 31, 2018. This means that there is a limited amount of time to start the process of getting a geothermal system installed in your home and be able to take advantage of both the federal and South Carolina tax credits.
The main reasons you should act sooner than later are:
1. Geothermal systems take longer to install than traditional HVAC systems.
2. Due to the tax credit expiring, we anticipate strong demand that could lead to an installation backlog.
Geothermal Installation Timeline
If we are replacing a standard air conditioner and furnace, we can usually have the entire installation done in one day. While we don’t generally install a new system the day after you purchase it, the time between making the decision to purchase and completing the installation is fairly short. Because geothermal systems require a loop (see our how they work page for more), it takes longer to go from purchase to installation. While we can generally use the existing duct work if you are replacing a traditional system, planning and installing the loop will take time. Proper load calculations have to be performed to determine how much loop will be needed. Each home site will have different options for installation of the loop. Time will be needed to go over the lot, determine where utility lines, septic fields or other obstacles are and where the loop can be safely installed. Then the installation of the loop will take some time. Underwater loops are usually quicker to install than underground loops. When vertical loops are needed, more specialized equipment used to drill holes deep down into the ground is needed. Drilling a vertical loop can be time consuming and the number of qualified drillers is limited, so rising demand could extend the length of time it takes to complete installation of the system.
Additionally, geothermal installations require specialized knowledge. Our geothermal installers have undergone hours of specialized training and have years of experience installing geothermal systems. We cannot and will not use installers without the required training and experience on our geothermal installations, so if you wait until too late in the year, we may not be able to schedule your installation in time to have your system up and running by the end of the year deadline.
If you are considering installing a geothermal system in your present home or one you are building during 2018, we suggest you give us a call today at 803-327-2700. Contacting us now will allow us to give you a complete quote, and schedule your installation so that we can be sure you qualify for all the tax credits you deserve.