§ 9603. Exemptions
The following transfers are exempt from the tax imposed by this chapter:
(1) Transfers recorded prior to January 1, 1968.
(2) Transfers of property to the United States of America; the State of Vermont; or any
of their instrumentalities, agencies, or subdivisions.
(3) Transfers directly to the obligee to secure a debt or other obligation.
(4) Transfers that, without additional consideration, confirm or correct a transfer previously
recorded.
(5) Transfers between two spouses, or parent and child or child’s spouse, or grandparent
and grandchild or grandchild’s spouse, without actual consideration therefor; and
also transfers in trust or by decree of court to the extent of the benefit to the
donor or one or more of the related persons named in this subdivision; and transfers
from a trust named in this subdivision conveying or releasing the property free of
trust as between those related persons and without actual consideration therefor.
(6) Transfers to effectuate a mere change of identity or form of ownership or organization
where there is no change in beneficial ownership.
(7) Transfers directly to the obligor of release of property that is security for a debt
or other obligation when such debt or other obligation has been fully satisfied.
(8) Transfers of partition.
(9) Transfers made pursuant to mergers or consolidations of corporations pursuant to which
transfer no gain or loss is recognized under the Internal Revenue Code, and bona fide
transfers to shareholders of corporations in connection with the complete dissolution
thereof, except where the Commissioner finds that a major purpose of such dissolution
is to avoid the property transfer tax.
(10) Transfers made by a subsidiary corporation to its parent corporation for no consideration
other than cancellation or surrender of the subsidiary’s stock.
(11) Transfers made to a corporation at the time of its formation pursuant to which transfer
no gain or loss is recognized under 26 U.S.C. § 351, except where the Commissioner finds that a major purpose of such transaction is
to avoid the property transfer tax.
(12) Transfers made to, or made by, a local development corporation as defined under 10 V.S.A. § 212(10).
(13) Transfers made to, or made by, an authority established pursuant to 10 V.S.A. chapter
12.
(14)(A) Transfers to organizations qualifying under 26 U.S.C. § 501(c)(3), as amended, and that prior to the transfer have been determined to meet the “public
support” test of 26 U.S.C. § 509(a)(2), as amended, provided one of the stated purposes of the organization is to acquire
property or rights and less than fee interest in property in order to preserve farmland
or open-space land, and provided that the property transferred, or rights and interests
in the property, will be held by the organization for this purpose. As used in this
section, “farmland” means real estate that will be actively operated or leased as
part of a farm enterprise, including dwellings and agricultural structures, and “open-space
land” means land without structures thereon.
(B) Transfers to organizations qualifying under 26 U.S.C. § 501(c)(3), as amended, and that prior to the transfer have been determined to meet the “public
support” test of 26 U.S.C. § 509(a)(1), as amended, shall not be exempt from tax, but the tax shall be deferred, provided
one of the stated purposes of the organization is to acquire property or rights and
less than fee interest in property in order to preserve farmland or open-space land,
and provided that the property transferred, or rights and interests in the property,
will be held by the organization for this purpose. Any transferee organization for
which tax is deferred under this subdivision shall pay the deferred tax upon later
transfer by that organization of all or a part of the property or the development
rights for that property, up to a maximum of the consideration received for such later
transfers.
(C)(i) Transfers from one organization qualifying under 26 U.S.C. § 501(c)(3), as amended, to another organization qualifying under 26 U.S.C. § 501(c)(3), provided the organizations are related organizations and the Commissioner does not
determine that a major purpose of the transaction is to avoid the tax imposed under
this chapter. As used in this subdivision (C), “related organizations” means one organization
holds 50 percent or more of the membership interest of the other organization or one
organization appoints or elects, including the power to remove and replace, 50 percent
or more of the members of the other organization’s governing body.
(ii)(I) Notwithstanding subdivision (i) of this subdivision (C), a transferee organization
that receives property in a transfer exempt under subdivision (i) of this subdivision
(C) shall pay the tax imposed under this chapter on the value of the property transferred
if:
(aa) not more than three years after the date of the first transfer, the transferee subsequently
transfers any portion of the property;
(bb) the second transfer is not exempt under subdivision (i) of this subdivision (C) as
a transfer between related organizations; and
(cc) the Commissioner determines that a major purpose of the transaction is to avoid the
tax imposed under this chapter.
(II) The tax imposed under this subdivision (C)(ii) on the value of the property transferred
at the time of the first transfer shall be due not later than 30 days after the second
transfer and shall apply in addition to any tax due under this chapter from the subsequent
transferee on the second transfer.
(15) Transfers made to a partnership at the time of its formation, pursuant to which transfer
no gain or loss is recognized under 26 U.S.C. § 721, except where the Commissioner finds that a major purpose of such transaction is
to avoid the property transfer tax.
(16) Transfers made by a partnership to a partner in connection with a complete dissolution
of the partnership, pursuant to which transfer no gain or loss is recognized under
the Internal Revenue Code, except where the Commissioner finds that a major purpose
of such dissolution is to avoid the property transfer tax.
(17) Transfers of utility line easements to a public utility or a municipality for a consideration
of $500.00 or less.
(18) Transfers between the obligor and the primary obligee arising out of a foreclosure
proceeding or conveyance in lieu of foreclosure.
(19) Transfers under a court judgment decreeing the disposition of real estate of the parties
to a civil marriage to the extent of the property interests conveyed to either of
the parties.
(20) Transfers made to organizations qualifying under 26 U.S.C. § 501(c)(3) or to a wholly owned subsidiary corporation of such an organization, provided one
of the stated purposes of the transferee is:
(A) to acquire property in order to preserve housing for families with low income;
(B) to operate a statewide public television station and provided that the property transferred
will be held by the transferee for this purpose; or
(C) to act as a food clearinghouse in order to reduce the incidence of hunger in Vermont
and provided that the property transferred will be held by the transferee for this
purpose.
(21) Transfers made to a corporation qualifying as a limited equity cooperative under the
Cooperative Housing Ownership Act, provided the property in the hands of the transferee
will be used to provide housing for persons or households of low or moderate income.
(22) Transfers to an organization qualifying under 26 U.S.C. § 501(c)(2), provided the organization is controlled exclusively by an organization or organizations
described in subdivision (14) of this section, and provided such transfer is for the
purposes described in that subdivision.
(23) Transfers of leasehold or fee interests made to individuals with low income by organizations
qualifying under 26 U.S.C. § 501(c)(3) and having as its primary purpose the provision of housing to individuals with low
income, or from a wholly owned subsidiary of the organization, when the transfer is
made concurrently with the transfer of an improvement located on the leasehold or
fee property, or is a renewal of the lease where the purpose of the lease is to provide
affordable housing or to ensure the continued affordability of the housing, or both.
(24) Transfers made to a limited liability company at the time of its formation pursuant
to which no gain or loss is recognized under the Internal Revenue Code, except where
the Commissioner finds that a major purpose of such transaction is to avoid the property
transfer tax.
(25) Transfers made by a limited liability company to a member in connection with a complete
dissolution of the limited liability company, pursuant to which transfer no gain or
loss is recognized under the Internal Revenue Code, except where the Commissioner
finds that a major purpose of such dissolution is to avoid the property transfer tax.
(26) Transfers of controlling interests in a person with a fee interest in property if
the transfer of the property would qualify for exemption if accomplished by deed of
the property between the parties to the transfer of the controlling interest.
(27)(A) Transfers of abandoned dwellings that the transferee certifies will be rehabilitated
for occupancy as principal residences and not as short-term rentals as defined under
18 V.S.A. § 4301(a)(14), provided the rehabilitation is completed and occupied not later than three years
after the date of the transfer. If three years after the date of transfer the rehabilitation
has not been completed and occupied, then the tax imposed by this chapter shall become
due.
(B) As used in this subdivision (27):
(i) “Abandoned” means real estate owned by a municipality and acquired through condemnation
or a tax sale, provided the real estate has substandard structural or housing conditions,
including unsanitary and unsafe dwellings and deterioration sufficient to constitute
a threat to human health, safety, and public welfare.
(ii) “Completed” means rehabilitation of a dwelling to be fit for occupancy as a principal
residence.
(iii) “Principal residence” means a dwelling occupied by a resident individual as the individual’s
domicile during the taxable year and for a property owner, owned, or for a renter,
rented under a rental agreement other than a short-term rental as defined under 18 V.S.A. § 4301(a)(14).
(iv) “Rehabilitation” means extensive repair, reconstruction, or renovation of an existing
dwelling beyond normal and ordinary maintenance, painting, repairs, or replacements,
with or without demolition, new construction, or enlargement.
(28) Transfers of a new mobile home, as that term is defined in 10 V.S.A. § 6201(1), that:
(A) bears a label evidencing, at a minimum, greater energy efficiency under the ENERGY
STAR Program established in 42 U.S.C. § 6294a; or
(B) is certified as a Zero Energy Ready Home by the U.S. Department of Energy. (Added 1967, No. 146, § 1, eff. Jan. 1, 1968; amended 1969, No. 144, § 7, eff. June 1, 1969; 1971, No. 68, § 2, eff. April 15, 1971; 1971, No. 73, § 38, eff. April 16, 1971; 1975, No. 225 (Adj. Sess.), §§ 3-9; 1981, No. 38, § 1, eff. April 21, 1981; 1981, No. 56, § 2; 1981, No. 247 (Adj. Sess.), § 15; 1987, No. 27, § 1, eff. April 30, 1987; 1987, No. 129 (Adj. Sess.), § 1, eff. March 23, 1988; 1987, No. 200 (Adj. Sess.), § 51; 1987, No. 254 (Adj. Sess.), § 5, eff. June 16, 1988; 1989, No. 222 (Adj. Sess.), §§ 20, 21, 40, eff. May 31, 1990; 1991, No. 67, §§ 9-17, 19, eff. June 19, 1991; 1991, No. 186 (Adj. Sess.), § 25, eff. May 7, 1992; 1995, No. 131 (Adj. Sess.), § 1; 1997, No. 50, §§ 29-31, eff. June 26, 1997; 2009, No. 3, § 12a, eff. Sept. 1, 2009; 2011, No. 143 (Adj. Sess.), § 24; 2019, No. 71, § 11; 2023, No. 72, § 13, eff. June 19, 2023; 2023, No. 181 (Adj. Sess.), § 83a, eff. August 1, 2024.)