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Vermont boasts low crime rates, a sparse population, and a high quality of life. It also has vibrant cities and a plethora of recreational opportunities for residents, in addition to a stable job market and economy, which makes it the state of choice for many real estate investors, landlords, property managers, and homeowners.
If you are considering a property in this state, it's important that you understand property taxes, as they have a direct impact on your earnings. From understanding Vermont property tax rates to exploring various exemptions, it's easy to feel like a fish out of water when attempting your taxes.
Fortunately, you can use this guide to find the information you need when navigating your taxes in Vermont. In this article, we'll talk about how property taxes work, when and how to pay, legal ways to lower your local property taxes, and more. Let's get started!
Understanding Property Taxes in Vermont
Homeowners in Vermont are required to pay property taxes every year. If you own property in the state, you must pay property taxes each year.
However, unlike many other states in the country where real estate taxes are solely levied and controlled at the local level, Vermont has an education tax that funds state schools, in addition to the local property taxes charged in Vermont to cover the cost of local services such as infrastructure.
Statewide Education Tax
This tax is similar to the tax imposed by school districts in other states. This tax is used to find public local schools and ensure that children have access to quality education.
It is a percentage of the assessed value of the property, which is generally determined by the amount per pupil that residents vote to spend. It is also influenced by a host of other factors, such as the common level of appraisal (CLA) and the type of property.
Local Property Taxes
Local Vermont property tax rates are set by municipalities and applied to the assessed value of your property. Every municipality has local assessors, also known as listers, who are responsible for evaluating properties.
Real estate is assessed at its fair market value or the price that an interested buyer would pay for it. Suppose the evaluated values in an area drop below 80 percent of the market value. In that case, cities and counties in Vermont are required by state law to carry out a reappraisal.
Vermont, however, does not establish specific criteria on when homes should be evaluated, and reassessment dates may vary by municipality.
How Many Times a Year Do You Pay Property Tax in Vermont?
The truth is that the state of Vermont does not specify when property taxes are due. They are typically collected in two payments. You will need to look at the rules specified by your local Vermont county to determine when to make payments. Real estate taxes in Franklin County, for example, are due by the fifth of June and the fifth of December.
Consequences of Late Payments
If you fail to make payments timeously, you could face interest charges and penalties. These charges can add up, making the financial burden greater, which is why it is important to stay up to date on payments to avoid these additional costs.
Should your property taxes continue to remain unpaid, the state could place a lien on your home, which could result in it being auctioned to secure the outstanding funds. Legal fees and damage to your credit score could also result from missed payments.
How to Pay a Property Tax Bill in Vermont
Payment methods vary from county to county or city to city, so it's important to check with your local assessor's office to learn more about the available options.
How Much Is Property Tax in Vermont?
Tax amounts vary based on a number of factors. These include the following:
Assessed Value
This plays an important role in determining your tax amount each year. The higher the assessed value of your home, the higher the tax you will pay. If you feel that the evaluated amount is too high, you can file an appeal to request that the value of your property be reassessed.
Vermont Property Tax Rates
Property tax rates vary from one area to another and play a role in determining how much you pay toward property taxes. These rates can be influenced by the CLA, voter-approved spending per pupil, and more.
Homestead Status
If you declare your property as your primary residence, you could enjoy tax benefits, as you will be taxed at a homestead tax rate.
Type of Property
Properties in Vermont are taxed depending on their classification. Commercial properties and multi-family homes, for example, will be taxed differently from residential homes.
How Is Property Tax Calculated in Vermont?
When investing in real estate in Vermont, you must understand how tax is calculated. Property tax is determined by multiplying a property's assessed value by the local property tax rate, which is established by each county or city. The tax rate is then applied to the assessed value of the property, and different exemptions that may be available, depending on the type of property you own and your eligibility, are deducted.
How Can I Lower My Property Taxes in Vermont?
When determining the amount you pay, you must explore the options available to lower your overall property tax amount. This can help you save hundreds of dollars every year. Here are some of the ways you can legally reduce your property taxes:
Appeal the Assessed Value
Actual market values may differ from the assessed value, so if you notice an unusually high property tax amount, you can appeal the assessment and request a property tax adjustment to have appraised values compared to actual market values. To do this, you will need to file an appeal to the Board of Assessors.
Look at Disaster Relief
In some cases, property tax relief may be offered for homes affected by natural disasters, so if there has been an event in your area, enquire about tax relief programs.
Explore Tax Exemptions and Relief Programs
In addition to disaster tax relief programs, there are also other programs available. Here are some of the exemptions you can apply for to enjoy tax benefits:
- Homestead declaration exemption
- Exemptions for disabled veterans and senior citizens
- Income-based exemption
- Farmland school tax exemption
Homeowners and investors are encouraged to explore the different tax relief programs and exemptions being offered in their city to enjoy possible tax reductions.
Conclusion
Whether you are running a property rental business or purchasing a home for your family, it's important to understand the tax implications. Knowledge truly is power when navigating the complex realm of property taxes, and the importance of equipping yourself with the relevant know-how cannot be stressed enough.
We have provided a comprehensive guide here to help you, but it's important that you look at local tax laws and ensure that you are consulting a tax advisor when necessary for advice on what to put on your next tax filing. By staying on top of things, you can avoid any nasty surprises.
To learn more, you can visit the Vermont Department of Taxes website.
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