Doug D announced latest IRS ruling

The monitoring reveals that the aux heat usually saves you operating costs. A 3ton unit runs about 5-10% more efficient than a 4ton unit, thus despite paying $20-30 a year for aux heat. Because of the 3 ton saving $80 a year in operating costs compared to the 4 ton, the aux heat results in about $60 in total annual energy savings, $2500 lesser upfront costs, lesser tax credit from the government. It appears strange that a measure that is a win-win for everyone is excluded.

 

"The costs for the distribution system for the home and a back-up emergency heating or cooling system are not eligible for the credit"

I didn't see anything about an auxiliary heater. I don't install back-up or emergency heaters. It is demonstrable on my geo design report where it will say aux required 7K, full emergency 15K.

 

Good point. We never design it to carry the full load, but to supplement via aux heat.

 

Incidently water to air manufacturers were suggesting the addition of a solar kit to their systems made the whole thing qualify for tax credit, I wonder if they'll take notice of this.

 

I'm looking to have a unit installed this year...what is everyone's thought on counting the auxiliary? Mine will be propane instead of electric.

Does it just need to be called "auxiliary" instead of emergency? Curious what others have done. My duct work is already done and does not need modified.

In my mind, emergency is for if everything fails. Like my generator for the house. It's not "auxiliary electric" it is "emergency electric". Not sure if my argument would hold up...

 

It's clear in the IRS publication that auxiliary devices, whether they are labeled as aux heat or emergency heat or as secondary heat or as wizzbang thingamajigger heat that it's exclude as part of the federal 30% tax credit as part of an otherwise qualified geothermal system. If some other credit qualifies than lucky you, but it wouldn't be under the current 30% geo credit.

You may not agree with this. And your installer may not agree with this. But until you and/or your installer work for the IRS it doesn't matter what you and/or your installer think unfortunately. If you try to claim the credit for the inelegible amount will you get caught? Probably not.. Could you? Definitely. Would you have to pay it back plus pay a penalty if you are caught? Yes. Is it worth the chance for a few hundred extra bucks off your taxes? Your call.

 

First the latest ruling made it clear that the tax credits do not extend to any "non renewable energy" portion of the heating system. Second if your furnace is emergency heat only, your geo is likely oversized.

 

Anyone get audited over taking the full geo install, ductwork & all, and water heater ?

 

There is no such thing as " the geothermal tax police ". In my neck of the woods people claim 30% of the cost of the whole project. Sometimes even including lawn restoration post drilling. I claimed 30% of the whole project on my install. I have been audited before for unclaimed cash plundering, I did not get audited for the geo. I am on the IRS red flag list and I got away with it.
Eric

 

this sounds like a story worth hearing How did the audit end, you aren't posting from jail

 

It is a short story really. I did not claim some cash income. They found out about some of it and wanted their cut. My tax gal advised that if I got away with more than they know, just pay what they are asking for. I did, situation involving bars averted. lol
Eric

 

A dial up from the gray bar hotel is way expensive. I am sure I have done the same thing. I say no when asked if cash is cheaper.

 

Cheers Eric