Residents of the Green Mountain State may receive a break on property taxes if they file a Vermont homestead declaration each year. State law subjects all real estate to education property taxes for school funding, but the rate levied on homestead property differs from that of nonresidential property. However, residents whose income exceeds the assigned threshold aren't eligible for the homestead tax exemption.
The definition of a homestead under Vermont law is quite straightforward. It is "the principal dwelling and parcel of land surrounding the dwelling, owned and occupied by the resident as the person's domicile." Single and multi-family dwellings may qualify as homesteads, as do mobile homes or cooperative housing corporations operating under Vermont law. Homesteads are not:
- a second home
- a vacation home
- under construction
- used commercially
If you use more than one-quarter of your home for business purposes, that section is considered nonresidential for homestead filing purposes. If you rent out any part of your home, the percentage occupied by the renter must be reported in your filing. An individual may claim only one residence as a homestead.
If your home is damaged due to a disaster or is under renovation to the extent that it is uninhabitable, it still can qualify for the exemption if you don't claim another residence as your homestead.
Homestead Eligibility Limitations
As of the time of publication, homeowners with an annual income of $109,000 and up are ineligible for a property tax adjustment. Those with incomes falling within the eligible range must have resided in Vermont for the entire previous calendar year, and cannot be claimed as a dependent on another filer's tax form.
Eligible Vermonters must file Form HS-122 Section A, the Homestead Declaration Form, each year by April 15. If you file after that date, you may be subject to penalties. To file your form, you need to provide information from the prior year's property tax bill, as well as income information for all household residents -- not just a spouse. Other necessary information for the form includes:
- the homestead's physical location -- no post office boxes, etc.
- your mailing address, which may be a post office box
- the 11-digit school parcel account number, found on your property tax bill
- the housesite education property tax -- found on your tax bill
- the housesite municipal property tax -- also on the bill
- all forms of household income, including veteran's benefits, Social Security, alimony, interest and dividends.
Exemptions from Attachment and Execution
Under Vermont law, a homestead cannot be attached and executed if it doesn't exceed $125,000 in value. In plain language, that means such a dwelling can't be seized by creditors for satisfaction of a judgment against the owner. For a homestead worth more than $125,000 the owner may "designate and choose the part thereof" to which the $125,000 exemption applies. For example, the owner may designate the house itself for the exemption, while a creditor may receive land on the property that could qualify for another building lot.