If you haven’t already, this is the best time for anyone in North Carolina or South Carolina to install a geothermal heating and cooling system in your home. The reason is simple. Tax Credits.
Installing the System this year will save you 30% on your federal tax bill and the credit is set to expire at the end of 2016. And, unless the federal credit is extended this will be the only year that the new South Carolina Geothermal Tax Credit will overlap with the federal credit.
Federal Tax Credit Set to Expire at the end of 2016
Since 2008, the U.S. Federal government has offered a renewable energy tax credit for installed geothermal heating and coolings systems. The tax credit is scheduled to expire at the end of 2016 and it doesn’t look like it will be renewed. Similar tax credits for solar energy were renewed at the end of 2015, but the portion of the tax credit impacting geothermal was not. Unless Congress revisits the tax credits by the end of this busy election year, this will be the last chance to claim the 30% tax credit.
Federal Geothermal Tax Credit Basics
• 30% tax credit
• No Maximum credit
• Does not have to be principal residence
• System must be in service by December 31, 2016.
How the Federal Tax Credit Makes Geothermal a Great Value in North 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 if installed in 2016
South Carolina Home Owners Save Even More in 2016
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 2016, 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 2016.
$17,500 Cost after Federal Tax Credit
-$ 6,250 NC 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.
Why it is important to act quickly
One of the most important requirements for the tax credit is that the geothermal heating and cooling system be installed and in service by December 31, 2016. 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 the federal tax credit.
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 2016, 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 the Federal tax credit.