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First enacted in 1968, the Vermont Property Transfer Tax
is a tax on the sale of Vermont real estate which is imposed at the time a
deed is presented to the town clerk for recording. The buyer is liable for
the tax unless the parties agree that the seller will pay the tax.
At present, the tax rate is 1.25% of the sale price of the real estate
being sold. Two lower tax rates exist for particular types of property:
1) For property that will be the primary residence of the buyer, the
transfer tax is lowered to .5% on the first $100,000 of the sale price,
but rises to the regular rate of 1.25% for that portion of the sale price
that is above $100,000.
2) For property that is enrolled in the state's current use program (a
program which reduces property taxes on agricultural and forest land) or
for property which is a working farm at the time of the transfer, the
transfer tax is lowered to .5% of the entire sale price. If current use
land is converted to another use within three years, or a working farm is
taken out of agriculture within six years, a buyer who paid the lower
transfer tax rate of .5% must pay an additional tax of .5%. [Current use
land which is “developed” may also be subject to a penalty of 10% or 20%
of the fair market value of the property at the time it leaves the
program, depending on how long it was in the program.]
The law provides for several exemptions from the transfer tax. Some of
these include: a transfer directly to a creditor to secure a debt; a
transfer without payment between a husband and wife, parent and child,
grandparent and grandchild, or partners in a civil union; and transfers to
a corporation, partnership or LLC at the time of formation, if no gain or
loss is recognized under the Internal Revenue Code.
Usually the property transfer tax form is filled out by the seller’s
attorney and signed by the parties at the closing. Note that the tax only
applies to real property, so any personal property – such as kitchen
appliances, furniture, etc. – is not taxed. The greater the percentage of
the total sale price that is allocated to personal property, the lower the
property transfer tax will be.
For information on the property transfer tax, call the Vermont Tax
Department at 828-2542.
This Information is provided by:
This publication is designed to provide accurate and authoritative
information on the subject matter covered. It is provided with the
understanding that the publisher is not engaged in rendering legal,
accounting or other professional services. If legal or other expert
assistance is required, the services of a competent professional should be
sought.
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