Residential Tax Credit

Massachusetts allows a 15% credit — up to $1,000 — against the state income tax for the net expenditure of a renewable-energy system (including installation costs) installed on an individual’s primary residence. If the credit amount is greater than a resident’s income tax liability, the excess credit amount may be carried forward to the next succeeding year for up to three years. Eligible technologies include solar water and space heating, photovoltaics (PV), and wind-energy systems. The original use of the system must begin with the taxpayer, and the system should “reasonably be expected to remain in operation for at least five years.”

The credit is available to any owner or tenant of residential property. For a newly constructed home, the credit is available to the original owner/occupant. Joint owners of a residential property shall share any credit available to the property under this subsection in the same proportion as their ownership interest. Any excess credit amount may be carried over to the next 1-3 taxable years. To claim the tax credit, complete schedule EC.

Federal Renewable Energy Tax Credit of 30%  
Eligible Renewable  Technologies: Solar Water Heat, Photovoltaics, Wind, Fuel Cells, Geothermal Heat Pumps, Other Solar Electric Technologies, Fuel Cells using Renewable Fuels.
A taxpayer may claim a credit of 30% of qualified expenditures for a system that serves a dwelling unit located in the United States and used as a residence by the taxpayer. Expenditures with respect to the equipment are treated as made when the installation is completed. If the installation is at a new home, the “placed in service” date is the date of occupancy by the homeowner. Expenditures include labor costs for on-site preparation, assembly or original system installation, and for piping or wiring to interconnect a system to the home. If the federal tax credit exceeds tax liability, the excess amount may be carried forward to the succeeding taxable year. The excess credit may be carried forward until 2016.

Solar-electric property 
•    There is no maximum credit for systems placed in service after 2008.
•    Systems must be placed in service before December 31, 2016.
•    The home served by the system does not have to be the taxpayer’s principal residence.

Solar water-heating property
•    There is no maximum credit for systems placed in service after 2008.
•    Systems must be placed in service before December 31, 2016.
•    Equipment must be certified for performance by the Solar Rating Certification Corporation (SRCC) or a comparable entity endorsed by the government of the state in which the property is installed.
•    At least half the energy used to heat the dwelling’s water must be from solar in order for the solar water-heating property expenditures to be eligible.
•    The tax credit does not apply to solar water-heating property for swimming pools or hot tubs.
•    The home served by the system does not have to be the taxpayer’s principal residence.

Fuel cell property
•    The maximum credit is $500 per half kilowatt (kW).
•    Systems must be placed in service before December 31, 2016.
•    The fuel cell must have a nameplate capacity of at least 0.5 kW of electricity using an electrochemical process and an electricity-only generation efficiency greater than 30%.
•    In case of joint occupancy, the maximum qualifying costs that can be taken into account by all occupants for figuring the credit is $1,667 per 0.5 kW. This does not apply to married individuals filing a joint return. The credit that may be claimed by each individual is proportional to the costs he or she paid.
•    The home served by the system must be the taxpayer’s principal residence.

Small wind-energy property
•    There is no maximum credit for systems placed in service after 2008. .
•    Systems must be placed in service before December 31, 2016.
•    The home served by the system does not have to be the taxpayer’s principal residence.

Geothermal heat pumps
•    There is no maximum credit for systems placed in service after 2008.
•    Systems must be placed in service before December 31, 2016.
•    The geothermal heat pump must meet federal Energy Star criteria.
•    The home served by the system does not have to be the taxpayer’s principal residence.