Homestead Property and Commercial Use

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. 

Business Use

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:

(a) 1,800 square foot home with 635 square feet used as a home office and inventory storage. The 35.28% is business use (635/1,800) is rounded to 35.00%.

The portion used for business is taxed at the nonresidential rate:

(b) 1,200 square foot home with 250 square feet used as a home office. The 20.83% business use (250/1,200) is rounded to 21%. Because this is less than 25%, enter 00.00%.

Rental Use

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:

(a) 1,800 square foot home with 365 square feet rented. The 20.27% rental use (365/1,800) is rounded to 20.00%.

Eighty percent of your home will be taxed at the resident rate.

 

Contact Us

Commissioner Kaj Samsom
133 State Street | Montpelier, VT 05633
(802) 828-2505

Taxpayer Assistance Window
Office Hours: 7:45 a.m. - 4:30 p.m. Monday - Friday

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