Vermont’s Property Transfer Tax (PTT)
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This article is for informational purposes only and should not be taken as legal or tax advice. Please consult a licensed professional for guidance specific to your situation.
When buying property in Vermont, most buyers are responsible for paying the Property Transfer Tax (PTT) at closing. This tax varies depending on whether the property will be your primary residence, a second home, or land held for investment. Here’s what you need to know to avoid surprises at the closing table.
Standard Property Transfer Tax Rates
Primary Residence
(You must make the home your primary residence within 12 months)
- 0.5% on the first $100,000 of the purchase price
- 1.25% on the amount above $100,000
Non-Primary Residence
(Second homes, investment properties, land)
- 1.25% on the entire purchase price
Land Withdrawn from Current Use
(If removed from the program within 3 years)
- Additional 5% tax
Who Pays the Tax?
The buyer typically pays the PTT at closing, but this can be negotiated in the purchase and sale agreement.
Qualifying for the Primary Residence Rate
To qualify for the reduced rate, you must intend to make the property your primary residence within 12 months of closing. Vermont uses several factors to determine this:
- Your address on your driver’s license
- Your income tax filing address
- Where you physically spend most of your time
- Voter registration
- Where your children attend school (if applicable)
Important: You do not need to be a current Vermont resident to qualify—only that you intend to make the property your main home within a year.
What Happens If You Don’t Move In?
If you claim the primary residence rate but fail to move in and use the property as your main home, the state can reassess the tax at the full 1.25% rate. This means you could owe:
- Back taxes
- Interest
- Penalties
Example: On a $500,000 purchase, the difference could be around $750 in tax liability, plus interest if reassessed.
The Vermont Department of Taxes may verify residency using public records and third-party data. This can include a review of your mailing address, driver’s license, voter registration, income tax filings, or property usage. If the Department determines the property was not used as a primary residence within 12 months of purchase, they may issue a reassessment. In that case, you would receive a notice of tax adjustment, with instructions for payment of the difference along with any applicable interest and penalties. While most filings are accepted as submitted, a small number of cases—estimated that 1 in 200—are reviewed and reassessed based on conflicting records or reports.
Official Resources
Questions?
Contact a local real estate agent, attorney, or the Vermont Department of Taxes at 802-828-5860 for more information or case-specific advice.
