Considering geothermal heat/cooling system in new home construction. The federal credit was just renewed, but are there circumstances we could lose it if rules change?

[rdm_bernard]

Essentially, we can't afford the system cost, unless we truly can collect the 30% in tax credits.  What will keep us from doing just that?  Law changes?  Annual maximums?  Expirations?  How many years can we carryover?

[JohnW15 · Accepted solution]

As with any law, there is the possibility that the new changes to the residential energy credit may be changed by Congress.  However, generally speaking, tax laws for individuals aren’t cut short of their legislated expiration dates.

That said, the credit for geothermal heat pump properties has been extended through tax years ending on December 31, 2021.  The tax code is silent as to how many years an unused portion of the credit may be carried over, so you should be able to carry forward any unclaimed portion into future years until it's exhausted.  There’s no annual maximum, per se; the credit is limited to what is needed to offset your taxes.

Only you know your financial situation, so you might try “dummying in” the updated Form 5695, Residential Energy Credits to get an idea of how much of your tax might be offset, and if you’ll potentially have a carryover.  The instructions are at 2017 Instructions for Form 5695. 

[rdm_bernard]

Thanks John!

[JohnW15]

You're very welcome!