Thinking of selling your home? In Massachusetts, if your home has a septic system, you are required to have a Title 5 inspection prior to putting your home for sale. The system must pass the Title 5 inspection to sell; otherwise, you need to repair, replace or connect into a municipal septic system.

There is some good news if your system failed inspection — there is a septic tax credit available. (A tax deduction reduces your income, while a tax credit is a dollar-to-dollar reduction in your actual tax bill.) This can significantly mitigate the costs to update or replace your septic system.

To qualify for the credit, you must own residential property located in Massachusetts and occupy that property as your primary and principal residence. The credit is effective for expenses incurred if you repaired or replaced a failed septic system, upgraded a septic system or connected to a municipal sewer system on or after Jan. 1, 2024. The changes made must be required by Title 5 of the state environmental code, 310 CMR 15.000, or a watershed permit issued by the Department of Environmental Protection. (See mass.gov and search for TIR 24-X for additional information.)

If you sell your primary residence in Massachusetts and move out of state, you can still claim the septic tax credit when you file your Massachusetts nonresident tax return for the year you sold the home. Part-year residents qualify for the full credit if the property is an owner-occupied principal residence in Massachusetts.

“Qualified expenses” to bring a failed system into full compliance include an upgraded system, an alternative system, a shared system and a connector to a municipal sewer system. This includes materials, design, engineering and construction, minus any grants or reimbursements; it does not include landscaping. The system must be officially declared failed under Title 5 regulations. After the work is done you must obtain a certificate of compliance from the Board of Health or completed permit from the Sewer Department. The credit is 60% of the costs, although the total amount of the credit cannot exceed $18,000. Any excess credit beyond your tax liability can be carried forward for up to five subsequent tax years.

Don’t let that money go down the drain! Consult your accountant or tax preparer to make sure you’re claiming this significant benefit.

Kim Foemmel
Foemmel Fine Homes
1 Lumber Street, Suite 207C
Hopkinton, MA
(508) 808-1149
Kim.Foemmel@gmail.com
FoemmelFineHomes.com

The advertiser is solely responsible for the content of this column, which is a paid advertisement.