REGION – All property sales, other than the named exemptions later in this article, are subject to a Vermont transfer tax paid at closing by the purchaser. The tax is now an adjusted rate, based on the property ownership status of principal (primary homes) or nonprincipal (vacation or residential investment property). There is also an underlying break for nonprincipal property that is available for long-term rental properties. A nonprimary homebuyer will pay a total transfer tax increase from 1.45% to 3.62% of the purchase price. For example, a $500,000 property sale under the new tax is equal to $18,100 due at closing by the purchaser, versus the previous transfer tax of $7,350. This significant change is important information for both buyers and sellers. Below is the transfer tax breakdown. For more explanation, feel free to call your trusted Realtor professional.
Effective Aug. 1, the property transfer tax rates are as follows.
The general tax rate remains the same, at 1.25%.
The Clean Water Surcharge rate increases from 0.2% to 0.22%, and increases exemption amounts.
The principal residence tax rate special tax rate of 0.5% remains the same, but value subject to the 0.5% rate (and exempt from the Clean Water Surcharge) increases from the first $100,000 of value paid to the first $200,000 of value paid. The general tax rate of 1.25%, plus the Clean Water Surcharge of 0.22% (total 1.47%) applies to the value paid above $200,000.
The nonprincipal residence tax rate (for a non-long-term rental residence fit for year-round habitation) increases from 1.25% to 3.40% (3.62% including the Clean Water Surcharge).
Exemption 99, for a principal residence, funded in part with a homeland grant through the Vermont Housing & Conservation Board (VHCB), or which the Vermont Housing Finance Agency (VHFA) or USDA Rural Development has committed to make or purchase, increases the exempt amount from the first $110,000 of value paid to the first $250,000 of value paid. The general tax rate of 1.25%, plus the Clean Water Surcharge of 0.22% (total 1.47%) will apply to the value paid above $250,000.
New exemptions from the property transfer tax and Clean Water Surcharge are as follows.
Abandoned dwellings – blighted real estate owned and acquired by a municipality through condemnation or tax sale. The buyer must certify at the time of purchase that the dwelling will be rehabilitated and occupied as a principal residence, and not as a short-term rental, and prove within three years of purchase that rehabilitation of the dwelling has been completed and the dwelling is occupied as a principal residence.
New ENERGY STAR mobile homes – new mobile homes, as defined in 10 V.S.A. § 6201(1), that have an ENERGY STAR energy efficiency label and that are certified as a Zero Energy Ready Home by the U.S. Department of Energy.
Information sourced from www.tax.vermont.gov/property/property-transfer-tax.
Written by Suzanne Garvey, owner/broker, Mary W. Davis Realtor & Associates, Inc.