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Homestead Declarations and
Property Tax Adjustments

SPECIAL SITUATIONS

Homestead Declaration

Grantor and sole beneficiary of a revocable trust owning the property:
A home owned by a trust is not a homestead unless it is the principal home of the grantor and sole beneficiary of the trust, and the trust is revocable or becomes irrevocable solely by reason of the grantor's death. The term "sole beneficiary" is satisfied if a husband and wife or civil union partners together are the only beneficiaries of the trust.

Life Estate holder of the property: 
A person who holds a life estate interest in a property that he or she occupies as a principal home must declare the property as a homestead.  A life estate is an interest in the property conveyed through a deed and recorded in the town records.

Homestead property crossing town boundaries
If the homestead property has contiguous acres that are in more than one town, a homestead declaration must be file in each town.

Homestead property in more than one parcel
If the homestead is contiguous acreage but identified by more than one parcel number, a homestead declaration must be filed for each parcel. 

Residing in a dwelling owned by a related farmer
See Regulation 1.5401(7)

Property Tax Adjustment Claim

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:
No business use or business use of 25% or less: the entire property will be taxed at the homestead school property tax rate. Enter 00.00% on Form HS-122, Section A, Line A4. More than 25% business use: enter the appropriate percentage on Form HS-122, Section A, Line A4. 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 for calculating nonresidential use are:

(a) 1,800 square foot home with 635 square feet used as a home office and inventory storage. The 35.28% is business use (635/1,800) is rounded to 35.00%. The portion used for business is taxed at the nonresidential rate.

(b) 1,200 square foot home with 250 square feet used as a home office. The 20.83% business use (250/1,200) is rounded to 21%. Because this is less than 25%, enter 00.00%.

Rental Use:
The portion of your home that you rent to another person is not part of your home and is taxed at the nonresidential tax rate. All
rental use must be reported. There is no 25% allowance for rentals.
When there is 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. Enter the percentage on Form HS-122, Section A, Line A5.

Example for calculating nonresidential rental use is:

1,800 square foot home with 365 square feet rented. The 20.27% rental use (365/1,800 is rounded to 20.00%. Eighty percent of your home will be taxed at the homestead rate and twenty percent at the nonresidential rate.

Nursing Home or Residential Care for Other Owner
 If the Homeowner is age 62 or older and the other owner of the housesite is the Homeowner's sibling or spouse who has moved indefinitely from the housesite to a nursing home or a residential care facility, the Homeowner treats his or her claim as if he or she is the only owner, provided the sibling or spouse does not make a claim for the same housesite or does not file a Renter Rebate Claim.

Renting at the End of the Year
 
If you owned a Vermont homestead in the previous calendar year but sold the homestead before April 1 of that year and then rented a home for the remainder of the year through Dec. 31, you may be eligible for a Renter Rebate if your household income is $47,000 or less.

NOTE: This is the only situation where a renter rebate can be for less than 12 months rental.

 

 

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