The Vermont Statutes Online

Title 32 : Taxation and Finance

Chapter 231 : Property Transfer Tax

• § 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.)