VT Transfer Tax

Understanding Vermont’s Real Estate Transfer Tax: A Guide for Buyers

What is the Vermont Transfer Tax?

When purchasing real estate in Vermont, buyers are required to pay a Property Transfer Tax (PTT) at the time of closing. This tax is calculated as a percentage of the purchase price and applies to both resident and out-of-state buyers, though the rate may vary depending on the circumstances of the transaction.

As of August 1, 2024, Vermont implemented significant changes to its Property Transfer Tax (PTT) rates, impacting both resident and out-of-state buyers. Here’s an updated overview:

Understanding Vermont’s Updated Property Transfer Tax Rates

The Vermont Property Transfer Tax is a fee imposed on the transfer of real estate titles within the state, typically paid by the buyer at closing. The revised rates are as follows:

• Primary Residence Purchases:
  • First $200,000: Taxed at 0.5%.
  • Amount Over $200,000: Taxed at 1.25%.
• Non-Primary Residence Purchases (e.g., second homes, investment properties):
  • Entire Purchase Price: Taxed at 3.4%.

Additionally, all transactions are subject to a Clean Water Surcharge of 0.22% on the purchase price.

tax.vermont.gov

Examples:

1. Primary Residence Purchase at $300,000:
   • First $200,000 at 0.5%: $1,000
   • Remaining $100,000 at 1.25%: $1,250
   • Total PTT: $2,250
   • Clean Water Surcharge at 0.22% of $300,000: $660
   • Total Tax Due: $2,910
2. Second Home Purchase at $300,000:
   • Entire amount at 3.4%: $10,200
   • Clean Water Surcharge at 0.22% of $300,000: $660
   • Total Tax Due: $10,860

Comparing Vermont’s Transfer Tax to Other Locations

Transfer tax rates vary widely across different states and countries. Below is a comparison highlighting Vermont’s position relative to select locations:

Note: Rates for other locations are approximate and can vary based on specific county or city regulations.

Key Takeaways for Buyers

• Primary Residents: Benefit from a reduced tax rate on the first $200,000 of the property’s value.
• Non-Primary Residents: Face a higher tax rate of 3.4% on the entire purchase price, reflecting Vermont’s policy to encourage primary residency.
• Clean Water Surcharge: Applies uniformly to all property transactions at a rate of 0.22%.
• Comparison: Vermont’s rates, especially for non-primary residences, are higher than many U.S. states but remain competitive when compared to international locations like the Bahamas.

Understanding these updated tax rates is crucial for effective financial planning when purchasing property in Vermont. It’s advisable to consult with a local real estate professional or tax advisor to navigate these changes and optimize your investment strategy.