Introduction and Background (from the Vermont Department of Taxes Website)
In 1978, the Vermont legislature passed a law establishing the Use Value Appraisal of Agricultural, Forest, Conservation and Farm Buildings Property. Today, this program is known as “Current Use” and is administered by the Division of Property Valuation and Review within the Vermont Department of Taxes.
Once land is enrolled, it is subject to a lien. If this land is ever developed, the owner at the time of development must pay the Land Use Change Tax. The land use change tax is calculated as 10% of the fair market value of the developed parcel or portion of a parcel.
In this program, development includes any of the following:
- Subdivision so that one or more of the resulting parcels is less than 25 acres
- Construction of buildings, roads, or structures not used for forestry purposes
- Commercial mining, excavation or landfill activity, or cutting timber contrary to the management plan or contrary to state standards
The obligation to pay this tax runs with the land in perpetuity. The tax is not due unless and until the land is developed; however, it may be prepaid if the landowner wishes to clear the title. Additionally, there is a payment due if/when the property is withdrawn from the Program.
Although no tax is due unless the land is developed or withdrawn, the State of Vermont regards the Use Value Appraisal as a lien. Vermont is unique in this way, compared to other states with similar programs, which is why national lenders and the Secondary Market are often confused and concerned about our Current Use Program and the accompanying title insurance requirements and exceptions.
For more information visit the State’s website or call the VATC office.