Vermont Property Transfer Tax

Whether you are buying or selling your home, real estate transfer taxes are an important part of the closing process. The state of Vermont has one of the highest property transfer taxes in the country, so it's critical to understand the ins and outs of these fees before you close your deal.

Property tax is a key source of revenue for many communities, but it can also be used to address affordability issues. Annual property taxes can be constructed to provide relief for lower-income homeowners and increase rates on properties that are converted to non-primary uses, such as short-term rentals or vacation homes. Vermont Property transfer taxes are typically paid by the buyer at closing. In Vermont, the rate is based on the home’s value and whether or not it is a primary residence. The rate is 0.5% for the first $100,000 of value and 1.45% for the remaining amount. For a $400,000 home, the total transfer tax would be $4,476. However, if the property is being purchased with a VHFA or USDA loan, it is exempt from the first $110,000 of value.

How to File Vermont Property Transfer Tax?

Vermont Property Transfer Tax must be filed with a town clerk when any deed transferring title to real estate is presented for recording. The return must contain the name and address of the grantor (seller) and the grantee (buyer), along with the total consideration paid for the property. The tax must be calculated based on the total consideration and the current transfer tax rate. Vouchers must be submitted with the return to prove payment of the transfer tax.

In addition to the transfer tax, there are also a number of other closing costs associated with buying a home in Vermont. Some of these costs include the lender’s loan origination fee, inspection fees, title insurance premium and attorney fees. However, negotiating with the seller can minimize some of these closing costs.

How to Pay Vermont Property Transfer Tax
Vermont Property Transfer Tax 1

How to Pay Vermont Property Transfer Tax?

A property transfer tax return must be filed whenever a deed transferring ownership of a property is recorded in a town. This can be done online through myVTax, the department’s online filing and payment system.Vermont property transfer tax is usually paid in addition to other closing costs, such as mortgage insurance and title insurance.

In order to pay Vermont property transfer tax, the grantor (seller) and grantee (buyer) must fill out a Vermont Property Transfer Tax Return Form PT-172. This form requires both parties to provide their name, address, and other details about the transaction. The form also needs to be signed and dated by both parties.

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