View residential property tax credits

If you own residential property in Massachusetts, you might be able to claim certain credits on your Massachusetts personal income tax return.

Lead paint removal credit

You can get a tax credit if you own residential property in Massachusetts and paid for deleading (removing or covering lead paint) it to:

Nonresidents and part-year residents only qualify for this credit if the property is residential and located in Massachusetts. It does not need to be a principal residence in Massachusetts.

If you fully complied with the Massachusetts Lead Law, the credit you're allowed per deleaded residential unit is the smaller of:

  • The cost of removing or covering any paint, plaster, or other structural accessible materials that have dangerous levels of lead, or
  • $1,500

To qualify as fully complying with the credit:

  1. A licensed inspector establishes that there is a dangerous level of lead in the residence's accessible structural materials.
  2. After an authorized person deleads the premises, get a letter of compliance from a licensed inspector.
  3. Complete Schedule LP and enclose it with the tax return. 

If you brought your residence into interim control according to Section 197b, the credit you're allowed per deleaded residential unit is the smaller of:

  • Half the cost of removing or covering any paint, plaster, or other structural accessible materials that have dangerous levels of lead, or
  • $500

To qualify as interim control to claim the deleading credit:

  1. A licensed risk assessor establishes that there is a dangerous level of lead in the residence's accessible structural materials.
  2. After an authorized person deleads the premises, get a letter of interim control from a licensed risk assessor which certifies that the costs of establishing interim control measures are necessary for achieving full compliance.
  3. Complete Schedule LP and enclose it with the return. You should also keep the letter of interim control.

If the credit is greater than the tax due, you can carry the excess credit forward for up to 7 tax years afterward.

If you own a condominium, you can claim the credit for the amount you paid to delead common areas as well as what you paid to delead the individual unit. Owning a condominium means that your interest extends both to your individual unit and to common areas.

Condominium common areas and facilities include:

  • Party walls
  • Common walls
  • Halls
  • Lobbies
  • Public stairs
  • The land on which the building is located
  • The basement
  • Yard
  • Recreational facilities
  • Other areas normally in common use

If you claim the deleading expense as a deduction on U.S. Schedule E, adjust Massachusetts Schedule E by the amount of the Massachusetts allowable credit.

To claim the credit on your tax return:

  1. Complete and attach Schedule LP.
  2. Enter the amount of credit allowed on either MA Form 1 or Form 1-NR/PY (Schedule Z, Part 1, Line 1).

If you're submitting an abatement/amended tax return, attach:

  • Schedule LP, Credit for Removing or Covering Lead Paint on Residential Premises
  • Letter of compliance you received from a licensed inspector certifying the removal of lead, and/or
  • Letter of interim control you received from a licensed risk assessor

Additional Resources for Lead paint removal credit

Repair or replacement of failed cesspool or septic system credit (Title V)

If you:

  • Are not a dependent of another taxpayer
  • Own residential property in Massachusetts
  • Occupy the residential property as your principal residence

You're allowed a credit for expenses you paid to:

  • Repair or replace a failed cesspool or septic system to comply with state sewer system requirements
  • Connect to a municipal sewer system to follow a federal court order, administrative consent order, state court order, consent decree, or similar mandate.

Nonresidents do not qualify for this credit since the property must be an owner-occupied principal residence in Massachusetts. However, former Massachusetts residents who have to file Massachusetts nonresident tax returns may claim their unused prior year credit carryovers.

Part-year residents qualify for the full credit if the property is an owner-occupied principal residence in Massachusetts.

Qualified expenses you paid to bring a failed system into full compliance include:

  • An upgraded system
  • An alternative system
  • A shared system
  • A connector to a sewer system

Generally, only expenses for services or costs in connecting or hooking-up a sewer line from your property to the public sewer line qualify when calculating the credit. If you got a loan to finance a sewer line hook-up or connection, you can include it in calculating the Title V credit if you have to or are allowed to connect to a town or city sewer system to cure a failed system. 

If you voluntarily repair or replace a cesspool or septic tank, you can not claim this credit since it is not considered a "failed" system under Title V. When calculating the credit, do not include betterments (improvements) related to constructing, extending, improving, or maintaining a new or existing sewer system and/or a water treatment system for a city or town either.

To qualify for the credit:

  1. The credit is 40% (.40) of the costs (as long as they're $15,000 or less). The total amount of credit has to be less than $6,000.
  2. When calculating the credit, subtract any interest subsidies you received from Massachusetts.
  3. You can claim the credit for the year the repair or replacement work is completed.

If the credit is greater than the tax you owe, you can carry forward the excess credit for up to the next 5 tax years.

Interest subsidies

If you got a below market interest rate loan from Massachusetts or another source, or a below market interest rate betterment from a municipality, the amount of credit you can claim is reduced by the amount of interest subsidy you received at the time you claim the credit.

A below market interest rate loan is a low interest rate loan or betterment offered by:

  • The Department of Environmental Protection
  • The Massachusetts Housing Finance Authority
  • Any city or town, or
  • Any other source

To repair and replace a failed septic system.

The amount of interest subsidy you need to deduct from the septic credit is the difference between:

  • What you would have paid in interest if you used the non-subsidized state interest rate when claiming the credit
  • What interest you actually paid using the below market interest rate (the subsidized rate)

The non-subsidized state interest rate is an annual rate that is the average of the 4 quarterly state interest rates for the calendar year.

Special rules for court-mandated sewer hookups

A court-mandated sewer hookup is when you're ordered by federal or state court to connect to, or "hook up" to, an existing municipal sewer system.

If you have to connect your septic system to the city or town sewer system because of:

  • A federal court order
  • A Massachusetts state court order
  • An Administrative Consent Order from the Massachusetts Department of Environmental Protection
  • A consent decree or similar mandate from a federal or state court

You can claim this Title V credit, even if your septic system was not inspected and determined a "failed system" and you didn't get a Certificate of Compliance.

To claim the credit on your tax return:

  • Complete and attach Schedule SC, Septic Credit.
  • If you don't have a Certificate of Compliance, get a verification letter from your city or town and attach it.
  • Enter the amount of credit allowed on either MA Form 1 or Form 1-NR/PY, Schedule Z, Part 1, Line 3.

If you're submitting an abatement/amended tax return, attach:

  • Schedule SC, Septic Credit
  • A Certificate of Compliance issued by the appropriate authority or a verification letter from your city or town

Additional Resources for Repair or replacement of failed cesspool or septic system credit (Title V)

Solar, wind, and energy credit (Renewable Energy Source Property)

If you:

  • Are not a dependent of another taxpayer
  • Own or rent residential property in Massachusetts
  • Occupy the residential property as your principal residence

You can get an energy credit for spending money on certain renewable source items. 

Part-year residents qualify for this credit only if the property is in Massachusetts and used as a principal residence.

Nonresidents do not qualify for this credit since the property must be an owner-occupied principal residence in Massachusetts. However, former Massachusetts residents who have to file Massachusetts nonresident tax returns can claim their unused prior year credit carryovers.

This credit is only for installing solar/wind systems. This credit is not the same as the federal credit for energy efficiency items. Renewable energy source items include equipment which uses or transmits solar or wind energy to heat, cool, or provide hot water for a principal residence in Massachusetts.

For the credit, you're allowed the smaller of:

  • 15% of the net expenditure for a renewable energy source property, or
  • $1,000

You cannot claim credit for expenses you paid for:

  • Air and water heat pumps
  • Caulking or weather stripping
  • Costs of energy conservation
  • Insulation
  • Storm or thermal windows or doors
  • Wood burning stoves and furnaces

If the credit is more than the tax you owe, you can carry the excess credit forward for up to the next 3 tax years.

To claim the credit on your tax return:

  1. Complete the Massachusetts Schedule EC.
  2. Enter the amount of credit allowed on either MA Form 1 or Form 1-NR/PY, Schedule Z, Part 2, Line 11.
  3. Attach both documents to your tax return.

If you're submitting an abatement/amended tax return, attach:

  • Schedule EC, Residential Energy Credit
  • Schedule Z, Part 2

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