Most states have some type of homestead law, and Vermont is no different. Under the Vermont Homestead Act, homeowners may exempt part of their home's value from creditors, which means they get to keep some or possibly all of the equity in their homes if they file for bankruptcy. Some homeowners may be eligible to claim a property tax adjustment, too.
The Vermont Homestead law allows homeowners to protect up to $125,000 value in their main homes from creditors.
Defining a Vermont Homestead
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.
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.
Assessing Annual Forms
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.
- Vermont Agency of Administration: Homestead Declaration
- Vermont Department of Taxes: The Vermont Homestead Declaration
- Congressional Research Service. "Homestead Exemptions in Bankruptcy After the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA)," Summary Page. Accessed April 17, 2020.
- Institute on Taxation and Economic Policy. "Property Tax Homestead Exemptions." Accessed April 17, 2020.
- Connecticut General Assembly, OLR Research Report. "State Homestead Exemption and Credit Programs." Accessed April 17, 2020.
- Congressional Research Service. "Homestead Exemptions in Bankruptcy After the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA)," Pages 4-46. Accessed April 17, 2020.
- Congressional Research Service. "Homestead Exemptions in Bankruptcy After the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA)," Pages 9 and 41. Accessed April 17, 2020.
- U.S. House of Representatives, Office of the Law Revision Counsel. "11 USC 522: Exemptions." Accessed Feb. 2, 2020.
- Federal Register. "Revision of Certain Dollar Amounts in the Bankruptcy Code Prescribed Under Section 104(a) of the Code." Accessed Feb. 2, 2020.
- Congressional Research Service. "Homestead Exemptions in Bankruptcy After the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA)," Pages 31 and 36. Accessed April 17, 2020.
A graduate of New York University, Jane Meggitt's work has appeared in dozens of publications, including Sapling, Zack's, Financial Advisor, nj.com, LegalZoom and The Nest.