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Tax Credits with Geothermal and Radiant?

I know that Geo-thermal (Ground Source Heat Pump) qualifies for the 30% DOE Federal Tax credit  for total system and installation cost with no maximum $1,500 cap as on some other equipment.

My understanding is the language is rather vague with how it is written however. Some guys say that  the actual heat emitter (the radiant panel itself i.e. floor) is part of the "system cost" just like duct work is on a forced air system, or like the storage tank and HX is on a solar system. SO, does that include tubing and manifolds? Does it include poured concrete, Extruded heat emission plates, Gyp-Crete, or Warmboard?  Any of those (with tubing) could be the actual heat emitter and a necessary system component after all. The Warmboard folks didn't think so, but I've read other guys who say YES. Apparently it is rather vaguely worded and I can understand a company not wanting to promise something they are unsure of. Sometimes tax laws seem very subject to interpretation. Does anyone have any first hand experience with this?

One last question. If the tax credit is "Just for the equipment" does that cover the actual ground loops/ wells? They are a part of the heat pump itself. It won't work without it.

Any thoughts appreciated. Facts/experience  appreciated even more!



  • Kevin O. Pulver_2
    Kevin O. Pulver_2 Member Posts: 87
    Energy star website says...

    "IRS has not issued SPECIFIC written guidance on this question.

    The RULE OF THUMB that has become INFORMAL IRS guidance is that if the component is a CRITICAL PIECE OF THE PRODUCTS ENERGY EFFICIENCY, then it is covered, but if it's THE SAME COMPONENT that you would use on non-qualified product (gutter, and hardware on a qualified roof) ... then it would would not be covered.

    The following are probably NOT covered by the tax credit:

    nuts, bolts, gutter for a new roof

    Hearth stovepipe/chimney for a biomass stove


    You can also contact the IRS directly ..."

    Which I did. I spent about 25 minutes going through menus, mashing buttons, and contemplating purgatory, but finally got a nice, patient lady on the phone.

    She directed me to the energy star website which carries the above quote.

    I told her I needed something specific. i.e. Does Warmboard, Gyp-Crete, or Extruded heat emission plates qualify for the tax credit as part of the system?

    She said they can't make a ruling because they don't know anything about heating systems. I told her if my customer claims it and gets audited THEN the IRS WILL make a ruling! She said they would then do research, ask manufacturers, installers, and see if it's "a critical component". She suggested I ask the manufacturer. I told her the manufacturer is scared to commit because the IRS has the final say-so and is non-specific.  I know they'll make a ruling if they audit us. I'm just trying to get a ruling BEFORE hand.  I told her that by the definition they give on energy star:

    A radiant concrete slab WOULD be a necessary part of the system, (heat emitter) BUT it isn't different than what you would use with a forced air - same concrete floor.

    A supply/return/distribution ductwork WOULD be a necessary part of the system, BUT is isn't essentially different than what a normal furnace would use- same basic duct.

    The ground loops/wells for a GSHP ARE a necessary part of the system, AND they are different than what you would use on a regular furnace ( totally different, they don't exist on the non qualifying system)

    By that same logic, a heat emitter (wall/ceiling/floor/radiator) IS a necessary part of a radiant heating system. AND either plates, Gyp, or Warmboard is a necessary part of the system. If you use Warmboard for example, that IS totally different component than what you would have otherwise with a non qualifying system (though it DOES still function as a subfloor)  AND it supposedly uses the lowest required water temps and has the best efficiency, which is what the tax credit is all ABOUT.

    But basically, after 46 minutes and 3 seconds of holding that piece of plastic up to my head, all I learned is  that you will not know whether the heat emitter components (tubing, manifolds, and Gyp/Plates/Warmboard) qualify until you get audited, at which point the IRS WILL make a ruling. I asked Warmboard, and they didn't think they would qualify (they had done research) but didn't say they were "rejected". 

    Mark Eatherton, you are the Warmboard evangelist- What say you?

    I know you're not a tax attorney, but "off the record" speak freely -

    please!  Any other thoughts, or experiences? Thanks guys, Kevin
  • Kevin O. Pulver_2
    Kevin O. Pulver_2 Member Posts: 87
    You all feel free, join this conversation!  It's kinda one-sided right now, but I'm just thinking out loud.

    I thought of one more thing. On the negative side of my case:

    Warmboard COULD be used with a typical boiler system that would NOT have the efficiency to qualify for the 30% fed tax credit. 

    So could Gyp-crete be used with a typical boiler system that would NOT have the efficiency to qualify. It's even used sometimes WITHOUT radiant floor, to  just level a floor or provide some sound deadening.

    Heat emission plates also could be used with an 80% boiler.

    BUT a heat emitter is definitely a "required system component critical to peak efficiency" and shouldn't the most efficient components be the most qualified of all?

    The IRS lady tried to give me an example about necessary components.  "A human being can't operate without a heart" she said. I told her attorneys can, and she did laugh, so maybe she was human.

  • CMadatMe
    CMadatMe Member Posts: 3,085
    It Depends

    I would think the radiant or any heat emmiter that is installed and part of the geo contractors contract would qualify. Now, if his job ends in the basement and another contractor is responsible for the completion of the heating system then I would say no it does not qualify.

    May I ask why you went Geo and what type of payback you expect?
    "The bitter taste of a poor installation remains much longer than the sweet taste of the lowest price."
  • Kevin O. Pulver_2
    Kevin O. Pulver_2 Member Posts: 87
    Well Chris

    The deal isn't done. But homeowner is VERY interested in the lowest possible fuel bills. Of course it's impossible to know how much energy prices will increase and how fast, but the very best boiler I can install might get 98% efficiency, whereas a good GSHP is rated at least several times that and can do cooling also, maybe even provide some "free" DHW in summer. I think the best we can do is ask the homeowner if they want to try for the tax break or not. To say "for sure" that Warmboard for example WOULD qualify is impossible, since the people with the final word (IRS)don't even know! And I would argue that it's probably somewhat subjective- depends on who audits you whether they accept it or not.

    But the more I'm thinking about it, if the incentive is for high efficiency, and a GSHP has no limit whereas other lower efficiency units have a  $1500.00 cap, one would think that the powers that be  would be excited about you spending a little more to get the highest efficiency possible.
  • Get anything while you can,,,,,

    This SUPER BP OIL-MESS has left things in kaos,,,, so who`s left holding the bag??? 
  • Wayne_16
    Wayne_16 Member Posts: 130
    do it anyway, geo

    I realize you are trying to gain the best bang for your dollar and having the rest of us support your customers installation.  Do the geo with or with out the tax credit.  If there is an audit, what do you have to do? pay back the credit plus a possible fine, so what, your customer still has the most efficient system that we know of today and will have cash in the bank while all of us (the taxpayers) have paid for the system. 

    Minnesota Wayne
  • CMadatMe
    CMadatMe Member Posts: 3,085
    Fuel Savings

    I have a really hard time accepting that GEO produces the lowest fuel bills in the aspect that yes there is no gas or oil used by the homeowner but electrical consumption has to increase.  I would be interested if anyone knows the caprison KW usage in GEO compared to therms used in gas to produce 1,000,000 btu's.

    The other issue I have with GEO is that it's nice that it lowers the homeowners carbon footprint but in reality does it? Your just using the electric company as your fossil fuel. Coal is used most of the time as the fuel to make electricity and that's about 50% efficient. Does it not actually increase a homeowners carbon fooprint in the big picture?

    My feeling is that a properly designed radiant system around a mod/con is the most economical way to heat a home and offers a much faster payback and yes you can cool with it also. Just my opinion
    "The bitter taste of a poor installation remains much longer than the sweet taste of the lowest price."
  • NRT_Rob
    NRT_Rob Member Posts: 1,013
    all you need is COP

    here in maine, COP of 3 = oil. geo can hit COPs of 4 or 5 if well designed and installed. In general, with the high initial cost it only makes sense for very large loads or if you have a cheaper method like "pump and dump" available to you.

    not all electricity is made with fossil fuels, so going geo would reduce your carbon footprint as well. how much depends on where you are. it's not perfect, but it's better than burning oil. Coal in a power plant is better than, say, oil in a house boiler... they have scrubbers you don't have. it all stinks for CO2 though. in a lot of areas though you can buy a lot of hydro power, that helps.

    Also, reducing your peak loads (cooling) the way geo can is really beneficial for the grid, and can reduce the worst offenders, peak load generation, which is usually the dirtiest stuff around.

    that said, no one is ever going to get the IRS to pay a third of their tubing costs for a radiant job. You can achieve the same geo efficiency with air handlers as you can with radiant, and you can use radian without using geo, so no way would it qualify.
    Rob Brown
    Designer for Rockport Mechanical
    in beautiful Rockport Maine.
  • Kevin O. Pulver_2
    Kevin O. Pulver_2 Member Posts: 87
    It's not welfare Wayne...

    The tax credit is simply 30% of the system cost taken off your bottom line taxable income. So the taxpayers aren't funding someone else's system, the govt is simply rewarding those who choose to invest in efficiency by giving them back some of their OWN money. They figure it's good for American and "mother earth" which is very fashionable these days among those who believe in global warming. I personally think it's all baloney, but the geothermal is STILL the most efficient thing going.
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