As long as the property meets the requirements of a Vermont homestead, a part of the homestead property may be used for commercial purposes or as a rental. If more than 25% of the dwelling is used for business purposes, then that portion must be reported as nonresidential on the Homestead Declaration. However, if any part of the dwelling is a rental, then the percentage that is a rental must be reported. Outbuildings used for business or rental are considered nonresidential.
If there is no business use or the business use is 25% or less - enter 00.00%.
If more than 25% business use - enter the percentage. Generally, the business use percentage is the same as reported on your Federal income tax return.
Examples for calculating nonresidential use:
The portion used for business is taxed at the nonresidential rate:
Enter the percentage of your home that you rent to another person.
There is no 25% allowance for rentals. All rental use must be reported. The rental use percentage is generally the same percentage as reported on your Federal income tax return.
Example for calculating rental use is:
Eighty percent of your home will be taxed at the resident rate.