Schedule SC

The Massachusetts Residential Septic Credit can be claimed on Schedule SC (Septic Credit for Repairing or Replacing a Failed Cesspool or Septic System).

You can often determine whether your septic loan is a betterment or subsidized loan by looking at who gave you the money and why they gave it to you.

A Betterment Loan is usually issued by your local municipality (city or town).  Look for a line item on your property tax bill for "Septic Betterment."  The town pays for the repair upfront and "assesses" the cost back to you over several years.

A Subsidized Loan will usually come from the state or a non-profit, such as the Massachusetts Clean Water Trust or a specific "Failed Septic System" program.

You can check these three (3) places to also help you determine if your septic loan is a betterment or subsidized loan:

• If you are paying it back as part of your real estate taxes, it is a betterment.
• Look through your loan documents for something like "Community Septic Management Program" (often subsidized) or "Municipal Betterment Agreement.
• Within the tax program, it will ask for the interest paid.  For a betterment, this will be shown on your year-end tax statement from the town.  For a subsidized loan, you'll get a standard 1098 form (or a statement from the lending bank).

Note: On Massachusetts Schedule SC, you generally cannot claim the credit until the year the work is completed and paid for.  For a loan, the "payment" is considered made when the repair is finished (no matter when you finish paying off the loan).