How do Vermont’s property taxes compare with property taxes in peer states? Review our infographic to see a comparison of typical Vermont property tax liability to that of neighboring states.
A property tax is a levy on property that the owner is required to pay, with rates set as a percentage of the home value. Property assessments include two components-the improvement or building value, and the land or site value. Your property taxes help to fund local programs such as schools, fire stations, and municipal governments like select boards.
Additional information to help you with understanding property taxes, including how to appeal your property taxes can be found on the Secretary of State's website.
Education Tax Rate
The Homestead Education Tax Rate is based primarily on the education spending per equalized pupil of all the pupils residing in your town. Many town districts are also members of union school districts. Each town and union school district will have a tax rate based on its spending per pupil. For towns with multiple school districts, the tax rate is a combination of those rates.
LAND GAINS TAX
This tax applies on gains made from the sale or exchange of Vermont land held by the seller less than six years. The land gains tax rate is inversely proportionate to holding period. The tax applies to only the gain attributed to land (not buildings or structures). This tax is not imposed on land which is part of the first ten acres beneath or contiguous to the seller’s principal residence, or land purchased to build buyer’s principal residence (some conditions apply). Land may include timber and timer rights sold providing the underlying land is also sold within six years (some conditions apply).
LAND GAINS WITHHOLDING TAX
Anyone who purchases Vermont property that was held by the seller for less than six years is required to withhold 10% of the purchase price of the land from the seller and remit it to the Department of Taxes immediately after the sale on Form LGT-177, Vermont Land Gains Withholding Tax Return To Be Completed By Buyer (Transferee). If a seller is a nonresident of Vermont, the buyer is required to withhold Vermont income tax, and the Vermont Withholding Tax Return for Transfer of Real Property must also be filed with the Department on Form RW-171, Vermont Withholding Tax Return for Transfer of Real Property.
A purchaser who fails to withhold or remit the tax is personally liable for the amount required to be withheld, plus statutory interest and penalty.
PROPERTY TAX CREDIT
Property Tax Credits assist many Vermont homeowners with paying their property taxes. You may be eligible for a property tax credit if you meet these eligibility requirements:
- Your property is declared as your homestead
- You were domiciled in Vermont for the full prior calendar year
- You were not claimed as a dependent of another taxpayer
- You own the property as your principal residence as of April 1; and
- Your household meets the household income criteria
The homestead declaration, property tax credit claim, and household income form are generally submitted together with an income tax return. The credit is calculated by comparing property taxes paid based on property value to the amount allowed based on household income. The difference (if any) is applied as a credit to the property tax bill in the following tax year as “State Payments.” The maximum credit amount is $8,000.
PROPERTY TRANSFER TAX
This is a tax on the transfer of title to real property. The tax applies to both transfers by deed of title and transfers or acquisitions of a controlling interest in a person with title. The amount of tax due is based on the value of the property being transferred. A Property Transfer Tax Return must be filed with a town clerk whenever a deed(s) showing the transfer of title to real property is delivered to a town clerk for recording. A town clerk cannot record any deed unless it is accompanied by a completed Property Transfer Tax Return. When a transfer or acquisition of a controlling interest in a person with title to property occurs, and there is no deed transferred, a Property Transfer Tax Return must only be filed directly with the Department of Taxes.
You may use myVTax to file your return. Tax preparers who file more than five returns or certificate requests per calendar year are required to use myVTax for filing. If you file fewer than five returns, you may order a specific form online or by contacting us at (802) 828-2515.
Please also see our press release on this.
REAL ESTATE WITHHOLDING TAX
This tax requires taxpayers withhold 2.5% of the consideration for real property being sold by a non-resident of Vermont. The withholding is required to ensure that the appropriate amount of taxes on any gain resulting from the transfer is paid when the non-resident seller files a Vermont income tax return.
USE VALUE APPRAISAL PROGRAM OR CURRENT USE
The Use Value Appraisal Program (Current Use) is the valuation and taxation of farm and forest land based on its remaining in agricultural or forest use, instead of its value in the market place. This program keeps Vermont's agricultural and forest land in production, slows the development of these lands, and achieves greater equity in property taxation on undeveloped land.
This program includes conservation land owned by qualifying nonprofit organizations and the exemption from all property taxes of eligible farm buildings. When an application is approved and recorded in the municipal land records, a lien is established on the enrolled land to recover a land use change tax should all or any portion of the enrolled land become developed. Currently, more than 18,000 properties are enrolled, totaling more than 2.3 million acres which represents approximately 1/3 of Vermont's total land area.
Learn more about the Current Use Program and how to apply.