I usually include ductwork as part of the price for a geothermal heat and pump installation. With that said, my client is thinking of having a separate contractor do the ductwork instead. I'm not sure if this qualifies as part of overall costs since it's from a different contractor to install the ductwork separately. Can you elaborate if this will work under the guidelines?

ANSWER

The BIDaWIZ Team's Answer:

Unfortunately, the ductwork would not be eligible to be claimed as part of the credit. Only the cost of the heat exchange equipment in the ground outside the house can be eligible for the IRC Section 25D credit. Section 25D(d)(5)(B) defines qualified geothermal heat pump property as any equipment that (1) uses the ground or ground water as a thermal energy source to heat the dwelling unit or backup emergency heating and cooling systems. This is also referenced in IRS Notice 2013-70. Please find page 11 of the document and specifically question 31 and answer 31, which details the elements eligible for the credit. Ductwork is not mentioned and thus we don't believe it qualifies.