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Homestead Declarations and
Property Tax Adjustments

Homestead and Nonresidential Property Use  A property may be
classified as both homestead and nonresidential. When a portion of the property is a homestead and a portion is used for business purposes or rented out, the following rules apply:

Business Use: If there is no business use or the business use is 25% or less of the dwelling, the entire property will be taxed at the homestead school property tax rate. Enter 00.00% for business use in the VT Homestead Declaration portion of the HS-122. If more than 25% of the dwelling is used for business purposes, you enter the appropriate percentage on HS-122 Section A Line A4 of the VT Homestead Declaration. Your property tax bill will show both a homestead and nonresidential school property tax rate. Generally, the business use percentage is the same as reported on your Federal income tax return.

Examples to calculate business use: (a) 1,800 square foot dwelling with 635 square feet used as a home office and inventory storage. The 35.28% used for business (635/1,800) is rounded to 35%. The business use portion is taxed at the nonresidential rate. (b) 1,200 square foot dwelling with 250 square feet used as a home office. The 20.83% used for business (250/1,200) is rounded to 21%. Because the business use is less than 25%, enter 00.00%.

Rental Use: The portion of your dwelling that you rent to another person is nonresidential and is taxed at the nonresidential tax rate. All rental use must be reported. There is no 25% allowance for rentals. If you report rental use, your property tax bill will show both a homestead and nonresidential school property tax rate. The rental use percentage is generally the same as reported on your Federal income tax return. Example for calculating rental use is: 1,800 square foot dwelling with 365 square feet rented. The 20.27% rental use (365/1,800 is rounded to 20.00%. Eighty percent of your dwelling will be taxed at the homestead rate and twenty percent at the nonresidential rate.

 

File your Homestead Declaration and Property Tax Adjustment Online

More Information:
-2014 Adjustment worksheet
- Amending
- Buying & Selling Property
- Confidentiality
- Deceased Homeowner
- Definitions
- Delinquent Property Taxes
- Eligibility Requirements
- Extension of Time to File
- General Information
- Household Income
- Incomplete Filings
- Late Filing
- New Construction
- Nonresidential Use
- Offset of Adjustment
- Ownership Situations
- School District Codes
- SPAN
- Special Situations


 
Vermont Department of Taxes, 133 State Street, Montpelier, Vermont 05633-1401