Return to Annual Homestead Declarations
Vermont funds its educational system through a property tax system. The “education tax” is imposed on all homestead and nonresidential property, but at differing rates. The basis for classifying a particular property a homestead (and thus being taxed at a lower rate) is dependent upon the owner filing a “homestead declaration” with the Vermont Department of Taxes.
Effective January 1, 2013, property owners in Vermont will again have to file an annual homestead declaration in order to have their property classified as a homestead for purposes of the statewide education tax. This is actually a return to the system that existed up until 2010, when the Department of Taxes stopped requiring an annual declaration. A homestead declaration filed in 2010 remained valid until the property was sold, the property was no longer the owner’s primary residence or the owner was no longer domiciled in Vermont. When this happened the property owner was expected to file a homestead declaration withdrawal with the Department of Taxes.
The goal was to relieve property owners from having to remember to file the declaration each year. As it turns out, however, property owners are regularly forgetting to file the withdrawal which has apparently caused all kinds of record keeping problems for the Department of Taxes. In response, the Department has decided that a return to an annual filing requirement is in order.
A “homestead” property is statutorily defined as the principal dwelling and parcel of land surrounding the dwelling, owned and occupied by a resident individual as the individual’s domicile. An individual can only have one “homestead”; second homes and camps are generally not considered homesteads. (Camps can qualify only if it is the owner’s principal residence.) Although Vermont law does not require a particular number of days that an individual must occupy the dwelling to qualify as homestead, mere ownership and spending a lot of time at the property is not enough to qualify for homestead status. The individual must be domiciled in Vermont and the house must be occupied as the individual’s principal dwelling. Spouses and civil union partners who own and occupy a residence together need to file only one homestead declaration.
The necessary form, and more information about homestead declarations, can be found at: www.state.vt.us/tax