South Carolina’s sales tax laws are designed to encourage consumers to buy energy efficient manufactured homes. Consumers often win in three ways: less sales tax, lower energy usage, and in some cases, power company incentives.
One attractive incentive involves Energy Star homes.
Under SC law, there is no sales tax on the Energy Star home itself. Furniture and not-built-in appliances and items such as heat pumps, decks, steps, skirting are taxed separately.
Here’s an overview of how to help your customers qualify for this excellent incentive.
What’s the difference between an energy efficient MH and an Energy Star MH?
An energy efficient home meets the state efficiency standards and qualifies for a reduced sales tax rate of $300. Energy Star homes are built to federal standards set by the Environmental Protection Agency.
What are the benefits of the Energy Star standards?
They not only feature highly-effective insulation and high-performance windows with tight construction, but also energy-efficient heating and cooling equipment.
In other words, specific on-site work is required for the home to qualify as Energy Star. These requirements include tight duct work and a high-efficiency HVAC.
Properly installed insulation that meets or exceeds national code requirements helps achieve even temperatures throughout the house while using less energy. The result is lower utility costs and a quieter, more comfortable home.
Energy Star certified appliances add to the savings in Energy Star homes.
What are the on-site installation requirements for a home to qualify as Energy Star?
The requirements vary somewhat by manufacturer.
These typically involve the marriage seal line, duct installation and efficiency standards for the HVAC.
What are the paperwork requirements for a home to qualify for the Zero sales tax incentive?
Retailer sends signed checklist to the manufacturer
- Verify that the Site Installation Checklist provided by the manufacturer and shipped with the home is completed and signed. The gray ENERGY STAR quality assurance label affixed inside the home should also be signed.
- Return a copy of the signed Site Installation Checklist to the manufacturer.
Manufacturer enters the information on a national Energy Star database.
Retailer gives the customer:
- Two copies of the bill of sale (clearly showing date of sale) and
- Two copies of the signed Site Installation Checklist (must include customer’s name and home address).
- Energy Star Tax Credit Application Form. See below.
Or go to energy.sc.gov then click on Loans,Grant & Tax Incentives then Tax Incentives
What the customer does to qualify for the $750 income tax credit. (Explain to customer and give him Customer Pamphlet below.)
The customer forwards these items to the SC Energy Office:
- Bill of Sale
- Site Installation Checklist
- Energy Star Tax Credit Application Form. The Energy Office address is on the application form.
What is the time period for receiving the Energy Star sales tax incentive?
Like many tax incentives, the Energy Star tax break was originally passed for a specific period of time. The Energy Star incentive is in effect through July 1, 2024. Legislation to extend the incentive another five year is near passage at the SC Statehouse.
What happens next?
The Energy Office checks the national website, approves the Energy Star Tax Credit Application Form (for the $750 tax rebate) and sends the approval form back to the customer.
What the customer does when he or she receives the approved form from the Energy Office.
The customer should put the approved form with their tax records. When they file their taxes, the form should be included with the tax return.
This seems like a lot of hoopla and paperwork.
After you do it a few times, it gets easy. All the retailer is doing is completing the On-site checklist and giving copies to the manufacturer and customer. Plus you give the customer two bills of sale.
This is called a non-refundable tax credit. What’s that mean?
Non-refundable tax credits cannot reduce the tax owed to less than zero.
So this income tax credit isn’t going to all of my customers?
Good point. But you need to give them the forms in order to have no sales tax, even if it is a formality.
On the other hand, if the customer probably is going to qualify, why not walk them through the process, maybe mail in the paperwork for them. That’s the type of service people remember and appreciate that generates referrals.
Please click below for copies of the documents needed to help a customer qualify for the valuable Energy Star sales tax incentive.
Manufactured Home $750 Tax Credit Application Form (Give to Customer)