Schedule Sc - Septic Credit Credit For Repairing Or Replacing A Failed Cesspool Or Septic System - 2013 Page 3
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3Schedule SC Instructions
The Septic Credit is a credit equal to 40% of the actual costs incurred
The Commonwealth, through the efforts of the DEP, and the Mass-
What is the Title 5 Septic Credit?
What is an Interest Subsidy?
in the repair or replacement of a failed septic system. The expenses
achusetts Housing Finance Agency (MHFA) and the state’s cities and
are the lesser of the taxpayer’s actual costs paid to repair and replace
towns, offers qualified owners interest subsidies in the form of low
the system, or $15,000. The maximum amount of the credit that may
interest rate loans and betterments for the repair and replacement of
be claimed in any tax year is $1,500. Note: If you moved during the
failed septic systems. If an owner has received an interest subsidy,
taxable year and had more than one principal residence that qualified
the amount of the Title 5 credit that the owner may claim is reduced
for the Septic Credit, you must file a separate Schedule SC for each
by the amount of the interest subsidy the owner receives. Generally,
of those principal residences. However, the maximum amount of the
the amount of the interest subsidy is the difference between the non-
combined Schedule SC credits cannot exceed $1,500. Any excess
subsidized interest rate determined under G.L. c. 62C, § 32(a) in ef-
credit amount may be used in the five tax years following the year in
fect at the time the owner receives the subsidy and the amount of
which the credit was initially claimed. The total amount of credit that
interest the owner actually pays.
may be claimed by the owner for a residential property is $6,000.
To claim the credit, you must complete and enclose Schedule SC
How Do I Claim the Credit?
To claim the Septic Credit, you:
with your return. Failure to do so will result in this credit being disal-
Who is Qualified to Claim the Credit?
lowed on your tax return and an adjustment of your reported tax.
• must be the owner of the residential property located in
Massachusetts;
You must retain for your records:
• must occupy the property as your principal residence; and
• a copy of the Certificate of Compliance or verification letter;
• may not be the dependent of another taxpayer.
• if you have received an interest subsidy from the Commonwealth,
a copy of a truth in lending statement or similar document from the
You are the owner of the residential property if you have legal title to
lender stating the lender’s name, the amount of the loan, the interest
the property. Co-owners of the residential property who meet each
rate imposed, the length of the repayment term, and the amount of
of the above requirements may claim the credit proportionate to the
the loan that you have repaid; and/or
amount of actual costs paid by each such co-owner, up to the total
maximum amount of the credit of $1,500 per year. A principle resi-
• if the interest subsidy is in the form of a better ment, the relevant
dence is generally the residence that you live in most of the time. If an-
property tax bill(s) or other documents received from the taxpayer’s
other taxpayer may claim you as a dependent on his or her 2013
city or town stating the name of the city or town, the amount of the
Massachusetts income tax form you are not eligible to claim the credit.
betterment, the interest rate imposed, the length of the repayment
term, and the amount of the betterment that you have repaid.
For more information on the Septic Credit, see Technical Information
Actual costs are the reasonable and necessary costs paid by the
What are Actual Costs?
Releases 97-12, 98-8, 99-5 and 99-20 and DOR Directive 01-6.
owner to repair and replace a failed septic system, including the costs
for materials, equipment, demolition, relocation, design, engineering,
testing and inspection. Expenses incurred by the owner in 1995
What If I Am Taking the Septic Credit and
through 2012 to repair or replace a failed system are also actual
If you are taking another credit in addition to the Septic Credit on your
Another Credit On My Tax Return?
costs. Ac tual costs do not include costs paid for the repair and re-
tax return, you must reduce the amount of tax reported in line 12 of
placement of any system that is not a failed system, or for the repair
Schedule SC (from Form 1, line 28 or Form 1-NR/PY, line 32) by any
and replace ment of any system not undertaken pursuant to the rele-
Limited Income Credit and/or Credit for Taxes Paid to Other Jurisdic-
vant Department of Environmental Protection (DEP) reg u lations. A
tion and any other credits you may be eligible for. These include, but
copy of the Certificate of Compliance or verification letter issued to the
are not limited to, the Energy Credit, Lead Paint, Economic Oppor -
owner by the appropriate authority stating that the system has been
tunity Area Credit, Brownfields Credit, Low Income Housing Credit,
repaired or replaced in compliance with the relevant DEP regulations
Historic Rehabilitation Credit, Film Incentive Credit, Medical Device
must be kept with your records.
Credit and Employer Welllness Program Credit.
Note: It is more advantageous to use the credit(s) that is going to ex -
pire first.
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