Geothermal Systems - How Tax Credits Have Made Them Affordable
We get many questions on geothermal systems, particularly from homebuyers interested in a greener approach to their new home. Top questions include affordability and steps to installation for a geothermal system.
How Much Does a Geothermal System Cost?
A geothermal heating and cooling system in the Triangle area generally starts at about $8,000 per ton, installed. This compares to a cost of about $2,000 per ton for a traditional HVAC system.
Example Geothermal System
Just to make the numbers easy, let's look at a 3000 sq ft home. A 3000 sq ft home generally requires about a 5 ton system.
Traditional HVAC system -
5 tons at $2,000 each
$10,000 for total system - Traditional HVAC
Geothermal Heating and Cooling system -
5 tons at $8,000 each
$40,000 for total system - Geothermal Heating and Cooling
Geothermal Tax Credits
Ok, now we get to look at the tax credits. Remember, you'll want to consult a tax professional, and you will have to wait to get "refunded" for the tax credits. But the savings can be significant.
Federal Geothermal Tax Credit
30% of the cost of the Geothermal System, or $12,000 credit.
North Carolina State Geothermal Tax Credit
35% of the cost of the Geothermal System (with a cap of $8400) - $8,400 credit
Progress Energy Credit
$1200 credit
Cost of Geothermal after credits:
Original price tag = $40,000
- $12,000 Federal Tax Credit
- $8400 North Carolina State Tax Credit
- $1200 Progress Energy Credit
= $18,400 total cost.
Thus after credits, the cost is much closer to a traditional HVAC system. On average, a geothermal system saves 35% on energy costs for COOLING your home versus a standard HVAC system, and 70% on energy costs for HEATING your home versus a standard HVAC system.
Geothermal can be a great part of building green. Again, you'll want to talk with your tax professionals about how the tax credits work, but these credits have made a significant difference this year in the total cost of a geothermal system.
You may also be interested in these popular green building topics:
Building a Green Home - Top Requested Features
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