830 CMR: DEPARTMENT OF REVENUE
830 CMR 62.00: INCOME TAX
830 CMR 62.00 is amended by adding the following section:
830 CMR 62.6.1: Residential Energy Credit
- This page, 830 CMR 62.6.1: Residential Energy Credit, is offered by
- Massachusetts Department of Revenue
Regulation 830 CMR 62.6.1: Residential Energy Credit
830 CMR: DEPARTMENT OF REVENUE
Table of Contents
An owner or tenant of a residential property located in the commonwealth who is not a dependent of another taxpayer and who occupies the residential property as his or her principal residence is allowed a solar and wind energy credit ("energy credit") against personal income tax equal to fifteen percent of the net expenditure for renewable energy source property, or $1000, whichever is less. See G.L. c. 62, § 6(d), as amended by St. 1987, c. 677. The $1000 credit limitation applies to all renewable energy source expenditures made by an owner or tenant ("taxpayer") with respect to his or her principal residence.
Internal Revenue Code. The Internal Revenue Code, as amended on January 1, 1998, and in effect for the taxable year.
Net Expenditure. The total of the purchase price for any renewable energy source property, plus installation cost but less any credits received under the Internal Revenue Code and less grants or rebates received from the United States Department of Housing and Urban Development.
Renewable Energy Source Property. Property, including materials and component parts thereof, separately purchased and assembled by the residential property owner or tenant which, when installed in connection with a dwelling, transmits or uses solar energy or other form of renewable energy for the purposes of heating or cooling such dwelling or providing hot water for use within such dwelling, or for producing electricity for such purposes; wind energy for nonbusiness residential purposes is also renewable energy source property. To qualify as renewable energy source property, the original use of the property must begin with the taxpayer, the property must reasonably be expected to remain in operation for at least five years, and the property must meet quality standards as prescribed by this regulation.
Except as stated in this regulation, renewable energy source property does not include heating or cooling systems used to supplement renewable energy source equipment in heating or cooling a residence when such systems employ a form of energy other than solar or wind. For example, heat pumps or oil or gas furnaces used in connection with renewable energy source property are not renewable energy source property.
Solar Energy Property. Property which, when installed in connection with a dwelling, transmits or uses solar energy directly to heat or cool a dwelling or to provide hot water for use within a dwelling, or to produce electricity for such purposes, and which otherwise meets the requirements of this regulation for renewable energy source property. Property which uses fuel or energy only indirectly derived from solar energy, such as fossil fuel or wood, is not solar energy property.
Passive and active solar systems, and portions of the structure of the principal residence when the sole purpose of such portions is to transmit or use solar radiation or to enhance the collection and storage of solar energy by such systems, are solar energy property. For example, root ponds, roof collectors, freestanding thermal containers, and non-window glazing may qualify for the credit. However, portions of the structure of a principal residence, equipment, and materials which serve a dual purpose along with energy transmission (i.e., that serve as a structural component of the residence or that have a significant structural function) are not solar energy property. For example, roofs, windows, walls, and greenhouses are not solar energy property.
Examples of items that may qualify as solar energy property include collectors used to absorb sunlight and create hot liquids or air, storage tanks to store hot liquids, rockbeds to store hot air, thermostats to activate pumps or fans which circulate hot liquid or air, and heat exchangers which use hot liquids or air to create hot air or water.
Wind Energy Property. Property which, when installed in connection with a residential property, transmits or uses wind energy to produce energy in any form for nonbusiness residential purposes and which otherwise qualifies as renewable energy source property. Wind energy property generally uses wind to generate electricity, or mechanical forms of energy. Windmills and wind-driven generators are examples of wind energy property.
(3) Qualifying Expenditures.
Only net expenditures paid with respect to renewable energy source property used in connection with the taxpayer's principal residence may be used to compute the amount of the credit. The term "in connection with" includes, but is not limited to, renewable energy source property in or on a principal residence or residential property.
(a) Principal residence.
A taxpayer must be a resident of Massachusetts for his or her principal residence to be in Massachusetts. If a taxpayer is resident in Massachusetts and has only one place of residence, that place of residence is the taxpayer’s principal residence. If a taxpayer is resident in Massachusetts and has more than one place of residence, the determination of which place of residence is the taxpayer’s principal residence depends upon all the facts and circumstances in the case, including the number of days spent at each place of residence and the good faith representations of the taxpayer.
If an owner or tenant changes his or her principal place of residence within a taxable year an energy credit may be claimed for each principal residence of the taxpayer, subject to the maximum credit amount of $1000. Subject to the requirements of this regulation, joint owners of residential property may share any energy credit claimed for renewable energy source property expenditures in the same proportion as their ownership interest in the residential property. Joint owners are subject to the maximum credit amount of $1000. Joint ownership includes joint tenancy, tenancy in common and tenancy by the entirety. An individual who is a stockholder in a cooperative housing corporation, or who is a member of a condominium association with respect to a condominium which he or she owns, may claim a proportionate share of the renewable energy source expenditure of such condominium association or cooperative housing corporation. A cooperative housing or condominium unit may be treated as a "principal residence" for purposes of the $1000 credit limitation.
(b) Renewable energy source property.
Only renewable energy source property used for residential purposes qualifies for the energy credit. When at least eighty percent of the use of such property is for residential purposes, the entire amount of the renewable energy source expenditure may be used to compute the credit. However, if less than eighty percent of such property is used for residential purposes, the percent of the amount of the expenditure that must be used to compute the credit is the percent of the property's residential use.
Subject to the requirements of this regulation, joint owners of renewable energy source property may share any energy credit claimed for renewable energy source property expenditures in the same proportion as their expenditures for that property. Joint owners are subject to the maximum credit amount of $1000 per principal residence.
A renewable energy source expenditure does not include any expenditure for any energy storage medium if the primary function of that medium is not the storage of energy. For this reason expenditures for insulation, storm or thermal windows or doors, caulking or weather-stripping, furnace replacement burners, devices for modifying flue openings, furnace ignition systems, automatic setback thermostats, energy use meters and similar devices and items are not renewable energy source expenditures. In addition, the costs of maintenance and repair of installed renewable energy source property, or of leasing renewable energy source property, are not renewable energy source expenditures.
(4) Claiming the Credit.
For purposes of determining the taxable year in which an energy credit may be claimed, a renewable energy source expenditure is treated as made on the date on which the expenditure qualifies as timely, or the date on which the expenditure is paid or incurred by the taxpayer, whichever is later.
The amount of the energy credit claimed by the taxpayer in a taxable year may not exceed the taxpayer's personal income tax liability for that year. To determine the amount allowable in a given taxable year, a taxpayer must reduce the $1000 maximum credit amount by the amount of any energy credit allowed to the taxpayer in any prior taxable years with respect to the same principal residence. A taxpayer may carry-over any excess credit amount, as reduced from year to year, and apply it to his or her personal income tax liability for any one or more of the next succeeding three taxable years.
Emergency Regulation: 2/11/80
New Regulation Promulgated: 2/5/99
Amended: 12/16/16 - Section (3)(a)