The information below is for common real estate transactions. If you have a scenario which does not fall under one of these categories, you may still request a certificate, but the Department may require additional documentation.
Transferor (Seller) must meet the following requirements before requesting a Commissioner’s Certificate:
1. The transferor(s) or seller(s) must be in good standing with the Vermont Department of Taxes (the Department will review the transferor’s status).
What is meant by “good standing”?
You or your client are in good standing if you:
- have filed all returns for all taxes due to Vermont and
- have paid all taxes due, except those taxes currently on appeal with the Department
If you or your client are not in good standing with the Department but have arranged to correct your status by paying an outstanding debt from the sale, please let the Department know when applying and attach documentation. An example of a supporting document is a draft HUD 1 showing the proposed disbursement.
The Department can only discuss good standing issues with taxpayers, or their representatives authorized through a power of attorney. To discuss good standing with the taxpayer’s representative, the taxpayer must also authorize the release of information for all tax types, as long as it is related to a specific real estate transaction. If there are unfiled returns, we cannot issue a certificate until the Department receives the returns.
2. Proof of Basis of Property being sold
- If the property was purchased, submit a copy of Form PTT-172, Property Transfer Tax Return, from the original transfer. If for some reason the return is unavailable, you may submit a copy of the HUD 1 or other settlement statement.
- If the property was acquired through an estate, submit a copy of the estate inventory.
- If the property was acquired at the death of the donor of a Life Estate, Lady Bird Deed, Revocable Trust, or through a non-probated estate, submit 1) an appraisal or Lister Card and 2) information verifying date of death of the donor (usually a death certificate).
- If the property was acquired because of a foreclosure, submit 1) a copy of the Judgment Order and 2) a copy of the Decree of Foreclosure. If applicable, include the order for public sale and other real estate owned sheet (OREO).
- If the property was received as a gift prior to the donor’s passing, submit 1) a copy of Form PTT-172, Property Transfer Tax Return (PTTR), from when the donor acquired the property and 2) a copy of the PTTR from when the donor gifted the property to the seller.
- Improvements: Capital improvements that add value to the property do not include repairs, maintenance, or personal property. If you claim improvements, submit a detailed breakdown of the improvements with the associated costs identified by project. For example, if you add a new bathroom, then submit a list of items for the project and associated costs. See Capital Improvement Breakdown Examples.
- Passive Activity Loss Carryforward: To include loss in the basis calculation, submit a copy of Federal Form 8582 showing the loss being attributable to the property.
- Other: Purchase Expenses/Fees/Tax paid at acquisition—Property Transfer Tax, attorney’s fees, and title insurance. If you claim these costs, document them by submitting the Property Transfer Tax Return and/or Settlement Statement from the acquisition of the property.
- Depreciation: If depreciation has been or could have been applied to this property, submit a copy of the depreciation worksheet or an estimated value of depreciation using the value of the property minus the value of the land divided by 27.5 years times the number of years the property was rented or used in the production of income. If a depreciation statement is not included, we will use the straight-line method to estimate the property’s depreciation.
If the property was not depreciated or eligible to be depreciated, the seller must submit a signed statement using the language that “the property was not used for rental purposes or the production of income and has not been federally depreciated.”
Depreciation only applies to Real Estate Withholding, not Land Gains Withholding Certificates.
- Deferred Gain: If you previously deferred a capital gain through a 1031 Exchange, provide the deferred amount on the Additional Questions page of the certificate application. Enter the amount in the box under the question "Has there been any prior deferred gain?"
- Prior Casualty Loss: If you have claimed a casualty loss deduction, enter the amount of that deduction in the box under the question "Has a casualty loss been claimed for the property ?" on the Additional Questions page of the certificate application and provide a copy of the relevant tax form.
3. Full demographic and property information
Valid Social Security Numbers (SSNs) or Federal Employer Identification Numbers (FEINs) must be provided for all parties involved in the transfer.
The Department provides pseudo SSNs and FEINs when an individual or entity is not eligible for a SSN or FEIN. To obtain a pseudo SSN or FEIN, please message the department through myVTax. We will need full legal names and addresses of all parties needing a pseudo ID, as well as the reason for the request.
4. Complete worksheets/calculation page included in the myVTax application.
To be eligible for a Commissioners Certificate, you must attach all required documents to the certificate request in myVTax.
Capital Improvements Breakdown Examples
The breakdown should be a detailed list of the improvement project with the associated cost. This does not include any repairs, maintenance, or personal property. The Department requests sales receipts when there are questions about the scope and cost of an item on the list.
|Capital improvements: Renovated Kitchen|
|Date||Tiles: backsplash & flooring||Vendor||$1,575.00|
|Capital improvements: Renovated living room|
- Replacing the roof
- Painting as part of a new construction or remodel
- Repairs done as part of larger project are allowed. You can include repair work if it is done as part of an extensive remodeling or restoration job. For example, replacing broken windowpanes is a repair, but replacing the same window as part of a larger project to replace all the windows in your home counts as an improvement.
Do not include the following:
- Maintenance, such as painting the inside or outside of the property, would not be allowed as this is general upkeep.
- Repairs, such as repairing the roof, would not be included in the basis as this is general repairs to the property.
- Appliances and furnishings are not included in the basis as these are personal property.
Additional Documentation required will depend on the reason for the request for a Commissioners Certificate.
Review the checklist for each reason:
- Loss experienced on the sale.
- Withholding on gain would be lower than 2.5% of sales price.
- Amount of Gain Realized on Sale Is Lower Than Federal Exclusion Amount - No longer available in myVTax.
- Federal §121 exclusion will be claimed.
- Transaction is part of a §1031 exchange agreement.
- Some or all transferors (sellers) are Vermont residents or domestic entities.
- Selling entity is tax exempt.
- Other reason where gain is not recognized federally.