Changes to the VT Property Transfer Tax

On Monday, June 17th, the Vermont Legislature overrode Governor Scott’s veto of Bill H.687, An act relating to community resilience and biodiversity protection through land use. This Bill includes many Act 250 updates and incentives for increased housing, which should be reviewed, but of more urgency, H.687 includes changes to the Property Transfer Tax that go into effect on August 1, 2024.

The property transfer tax increases contained in Bill H.687 will affect the sale of residential, non-homestead properties. The legislature has increased the property transfer tax on these properties from 1.25% to 3.4%, plus a clean water surcharge, resulting in a total transfer tax of 3.62%. This tax applies to the entire purchase price of these properties and takes effect on August 1, 2024. Any closing on or after August 1^st will be subject to this increase.

Please review H.687 HERE for further details and information for your practice.

There are tax benefits to the Bill, which include an increased initial transfer tax threshold for buyers of residential homestead properties, increasing from $100,000 to $200,000, and financing through VHFA, Vermont Housing Conservation Board, or US Department of Rural Development will include exemption from transfer tax of the first $250,000. Additionally, these purchasers are exempt from the clean water surcharge for the increased thresholds. Beyond these thresholds, the transfer tax rate of 1.25% will apply to the remaining purchase price. The Bill also raises the clean water surcharge from 0.2% to 0.22% on the value above the new thresholds. Thank you for your attention to this important matter.