§ 10002. Land and residences
(a) “Land” means all land, whether or not improved, that has been purchased and subdivided
by the transferor within the six years prior to the sale or exchange of the land,
but does not include land not exceeding 10 acres, necessary for the use of a dwelling
used by the seller of such land as his or her principal residence. Buildings or other
structures are not included in this definition of “land.” “Land” also means timber
or rights to timber when that timber or those timber rights are sold within six years
of their purchase, provided the underlying land is also sold within six years. “Underlying
land” means the land from which timber or timber rights have been separated, whether
subdivided or not. As used in this subsection, the term “subdivision” means a tract
or tracts of land, owned or controlled by a person, that the person has partitioned
or divided for the purpose of sale or transfer. Subdivision shall be deemed to have
occurred on the conveyance of the first lot or the filing of a plat, plan, or deed
in the town records, whichever first occurs. A subdivision shall not include a boundary
adjustment between adjacent parcels.
(b) Also excluded from the definition of “land” is the land, not exceeding 10 acres, necessary
for the use of a dwelling that, within one year from the date of acquisition, will
be used for the principal residence of the purchaser of such land. As used in this
section, “principal residence” means the principal dwelling of a person whose domicile
is in the State of Vermont. If, at the time of transfer, there is not on the land
a dwelling completed and fit for occupancy as the purchaser’s principal residence,
the residence shall be completed and occupied within two years of the date of transfer,
or the tax imposed by this chapter shall then become due and payable.
(c) If zoning or similar laws or regulations require a minimum of more than 10 acres for
residential property, that number of acres, instead of 10 acres, shall be excluded
from the definition of “land” under subsections (a) and (b) of this section, except
that not more than 25 acres shall be so excluded.
(d) Also excluded from the definition of “land” of subsection (a) of this section is the
land owned by a development corporation or local development corporation as defined
in 10 V.S.A. § 212(10).
(e) Also excluded from the definition of “land” of subsection (a) of this section is land
purchased by the State of Vermont from organizations qualifying under 26 U.S.C. § 501(c)(3).
(f) Also excluded from the definition of “land” is any land up to 10 acres, with the modification
permitted by subsection (c) of this section, acquired by a person who will build on
that land a house that, by the next succeeding sale, will be the principal residence
of the occupant when the person purchases from the person who built the house. The
person acquiring such land must certify to the Commissioner of Taxes that the person
will begin building within one year of date of purchase, complete the building within
two years from the date of purchase, and sell it within three years from date of purchase
to a person who qualifies under subsection (b) of this section. If the land is sold
as more than one parcel by the builder who acquired it, only those parcels on which
a dwelling has been completed in accordance with the requirements of this subsection
shall be excluded from the definition of “land.” The deed for the property shall recite
the fact that there is running with the land a lien equal to the amount of land gains
tax exempted by this subsection until the time as all conditions of this subsection
have been met.
(g) As used in this chapter, the phrase “necessary for the use of a dwelling” refers merely
to the fact that land is beneath or directly contiguous to the dwelling, and no other
showing of necessity shall be required. Where an exemption from taxation is provided
in the case of a purchase of land “necessary for the use of a dwelling used by the
taxpayer as the taxpayer’s principal residence,” the land need not have been purchased
at the same time as the dwelling to qualify for the exemption.
(h) Also excluded from the definition of “land” is any land conveyed pursuant to a court
judgment decreeing the disposition of real estate of the parties to a civil marriage,
to the extent that the land is conveyed to either of the parties.
(i) Also excluded from the definition of “land” of subsection (a) of this section is farmland
and open-space land sold to organizations qualifying under 26 U.S.C. § 501(c)(3), as amended, which also meet the “public support” test under 26 U.S.C. § 509(a)(2), provided one of the stated purposes of the organization is to acquire property or
rights and interests in property in order to preserve agricultural, forestry, or open-space
uses, and provided that the property transferred, or rights and interests in the property,
will be held for agricultural, forestry, or open-space purposes, and is so held by
such organization for at least six years. As used in this section, “farmland” means
land that will be actively operated or leased as part of a farm enterprise, and “open-space
land” shall mean land without structures thereon. If the property transferred, or
rights and interests in the property, is not so held by such organization for the
six-year period, the tax that would have been due from the seller or transferor shall
become due from such organization for that portion of the property not so held or
transferred to a governmental entity. In cases coming within this subsection, the
Commissioner of Taxes may require the seller or transferor to file a land gains tax
return at the time of the sale or exchange, in order to establish the amount of tax
that will become the tax liability of such organization in such case. The exclusion
under this subsection shall be disallowed if the Commissioner of Taxes determines
that the sale was not for a conservation purpose, as defined in 26 U.S.C. § 170(h), as amended.
(j) Also excluded from the definition of “land” of subsection (a) of this section is land
sold by the United States of America, the State of Vermont, or any of its instrumentalities
or subdivisions, or by organizations qualifying under 26 U.S.C. § 501(c)(3), provided that the sale is exempt from federal income taxation under the Internal
Revenue Code.
(k) Also excluded from the definition of “land” is agricultural land transferred by a
farmer to a member of the farmer’s family, when the land is used by the transferee
as agricultural land for a period of time that, when added to the time the land was
used as agricultural land by the transferor, equals or exceeds six years. As used
in this section, the terms “agricultural land” and “farmer” shall have the definitions
provided under section 3752 of this title, and “family” shall mean persons in a relationship to the transferor of grandparent,
parent or stepparent, brother or sister, or natural or adopted child. As used in this
section, land is deemed to be transferred from a farmer to a transferee when the farmer
has died and title vests in the transferee by right of survivorship in a joint tenancy,
or tenancy by the entirety, or through intestate succession, or by will, without any
intervening transfers, except those to and from the estate.
(l) Also excluded from the definition of “land” are conservation rights and interests
and preservation rights and interests transferred to a qualified holder. As used
in this section, “conservation rights and interests,” “preservation rights and interests,”
and “qualified holder” have the meanings given to them by 10 V.S.A. § 821.
(m) Also excluded from the definition of “land” is a parcel of land 25 acres or less,
purchased by a farmer, as defined in section 3752 of this title, for active and direct use by that farmer, and that, upon transfer, but for the acreage,
meets the definition of “agricultural land” or “managed forestland” in section 3752
of this title, and continues to meet that definition for at least six years after
the transfer.
(n) Also excluded from the definition of “land” is the land comprising a mobile home park
that is transferred in a single purchase to a group composed of a majority of the
mobile home park leaseholders, as defined in 10 V.S.A. § 6242(a), or to a nonprofit organization that represents such a group.
(o) Also excluded from the definition of “land” is the land sold to an organization that
qualifies under 26 U.S.C. § 501(c)(3) and also meets the “public support” test of 26 U.S.C. § 509(a)(2), if one of the stated purposes of the organization is to provide affordable housing
and if the land is sold by the organization within 12 months of the transfer to the
organization to a buyer, qualified under an affordable housing program, in a transfer
that meets all the requirements of subsection (b) of this section.
(1) If the organization fails to transfer the land within 12 months, or transfers it within
12 months but not to a qualified buyer for occupancy as the buyer’s principal residence,
then the organization shall become liable for the land gains tax due on the original
transfer of the land to the organization and for the land gains tax on the transfer
by the organization.
(2) If the organization transfers the land within 12 months, but at the time of the transfer
by the organization there is no dwelling on the land completed and fit for occupancy,
and the qualified buyer fails to complete and occupy a principal residence on the
land within two years of purchase from the organization, then the organization shall
become liable for the land gains tax due on the original transfer of the land to the
organization, and the buyer who purchased the land from the organization shall become
liable for the land gains tax due on the transfer from the organization to the buyer.
(p) Also excluded from the definition of “land” is a transfer of land in a Vermont neighborhood
or neighborhood development area, a downtown development district, a village center,
a growth center, or a new town center development district designated under 24 V.S.A. chapter 76A.
(q) Also excluded from the definition of “land” is a transfer of property to the State
of Vermont or a municipality for a project that is authorized under the State’s enacted
Transportation Program or for an emergency project within the meaning of 19 V.S.A. § 10g(h), regardless of whether the State or the municipality has commenced any condemnation
proceedings. (Added 1973, No. 81, § 8, eff. May 1, 1973; amended 1973, No. 209 (Adj. Sess.); 1975, No. 225 (Adj. Sess.), §§ 10-12; 1977, No. 240 (Adj. Sess.), §§ 1, 2, eff. April 17, 1978; 1979, No. 105 (Adj. Sess.), § 42; 1981, No. 247 (Adj. Sess.), § 16; 1983, No. 20, §§ 1, 2, eff. April 6, 1983; 1983, No. 59, § 7, eff. April 22, 1983; 1987, No. 27, § 2, eff. April 30, 1987; 1987, No. 64, § 11, eff. June 1, 1987; 1989, No. 119, § 17, eff. June 22, 1989; 1989, No. 222 (Adj. Sess.), §§ 27, 28, eff. May 31, 1990; 1991, No. 186 (Adj. Sess.), § 31a, eff. May 7, 1992; 1995, No. 53, § 5, eff. April 20, 1995; 1997, No. 103 (Adj. Sess.), § 12, eff. Jan. 1, 1998; 1999, No. 49, § 66, eff. June 2, 1999; 2003, No. 70 (Adj. Sess.), § 60, eff. March 1, 2004; 2007, No. 81, § 25, eff. June 11, 2007; 2007, No. 176 (Adj. Sess.), § 12; 2009, No. 3, § 12a, eff. Sept. 1, 2009; 2013, No. 59, § 13; 2015, No. 40, § 33; 2019, No. 71, § 16, eff. Jan. 1, 2020; 2021, No. 105 (Adj. Sess.), § 600, eff. July 1, 2022.)