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by Steve Cairns
Be forewarned, there will be a lot of angry property owners who will be seeing much higher property tax increases than it may appear on the surface. I believe the surprises to come will be numerous and upsetting.
As you may already know, 60-70% of homestead property owners are subject to income sensitivity. Unfortunately, a lot of these folks will likely see a much larger increase in their “sensitized” property tax than expected. This is because there are now three separate limits to how much credit one can receive:
1. There has always been a cutoff to the household income that is eligible for a credit. There can be a severe drop in the credit if one’s household income exceeds $90,000, even by $1. This has not changed since 2005. As the average Vermonter’s “household income” increases past the $90K each year, a few homeowners experienced a significant non-linear increase in their property tax.
So fewer and fewer homeowners are eligible each year and therefore have to pay considerably more than in previous years. I have seen cases in the past where an increase of $500 (putting them over the 90K) generated a property tax increase of over $4,000.
In the early days of the credit, those whose household income exceeded $90K could get a little, but even that ran out at $97K. After that, nothing. Since that time, the upper limit has increased to around $137K, I think, but this has varied over the years, once exceeding $150K.
2. When Act 60 introduced the property tax credit in 1997, there was a maximum credit of $8000. This was split up in a subsequent year to $5,600 max credit on the school tax and $2,400 municipal tax. I have no idea how this has impacted the total credits granted each year.
3. The major change to Act 60 since its inception has been the Legislature’s limitation on the Housesite Value that is eligible for any credit (Act 160, 2010). Originally set at $500K, it was subsequently reduced to $400K.
This limitation will have a profound impact on those homeowners whose Housesite Value already exceeds $400K. For them any increase in property assessments will NOT increase the amount of the credit, no matter what they report for household income.
Stowe is one of those towns that recently had a reassessment. For us, the assessments have more than doubled. So anyone with an previous assessment greater than $400K for Housesite value likely will see a new value of $850K. However, there will be no increase in the credit for them regardless of their income.
BOTTOM LINE: many homeowners who have been eligible for a credit and whose reassessments are going to increase their Housesite Value well past $400K will be seeing an unexpected additional increase due to this phenomenon over and above any 13.8% increase that has been tossed about in the media.
Oh, and the legislature is still screwing the self-employed and savers in general when it comes to calculating Household Income, but that is another story.
I could go on, but I think this is enough for you to get my point. We have not been given the full story in the media.
The author is a Stowe resident and owner of Tax Advisor Services. He is a registered IRS tax preparer.
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Categories: Commentary, Taxes
I am self employed.
I am also pretty severely disabled.
I work full-time at self employment as I couldn’t get a job as greeter at War-mart.
I make a living, Not a great living but it keeps me off Welfare (barely)
The current calculation of homestead overstates my income by about $17,000 give or take every year.
But if I have anymore increases in property tax I may have to cut back several areas of my business just to get into a lower bracket to save on P-Tax and get Healthcare for free.
I’m sorry but this is the reality of the situation.
Maybe Vermont should quite squeezing so hard, and maybe the DOD should take better care of those it has damaged.
Red.
Do a deep dive into the pending lawsuit in Texas pursued by the founder and CEO of Mockingbird Properties, Mitch Vexler. I listened to him speak recently and it all made sense considering what we see going on across the country. Collusion between banks, appraisers, real estate agents and local/state governments. The unraveling and exposure is just starting.
Include this reported March 2024: “Homeowners could see a significant drop in the cost of selling their homes after a powerful real estate trade group agreed last week to resolve antitrust litigation accusing brokerages of inflating sales commissions.
The $418 million settlement calls for the Chicago-based National Association of Realtors (NAR) to eliminate decades-old rules on commissions, and make it easier for buyers to negotiate fees with their own agents or use no agents at all, Reuters reports. The accord resolves claims against more than 1 million members, state and local realtor associations, and most smaller brokerages.” USNews
https://www.mockingbirdproperties.com/dcad
Whatever happened to the Taxed Enough Already/TEA Party? I think many of us are very open to joining some organized opposition to the insane tax rises happening in Vermont.
Lowering the cap on property value is truly frightening. According to Zillow, the average Vermont home value is currently $401,965. And as reported by Vt Digger (sorry) (“Vermont home prices spiked more than any other state last year”), the median sales price was $325,000 in 2023 according to the Vermont Housing Finance Agency.
So the brain trust in Montpelier has made taxation so complicated they are able to buffalo the legislature into passing these complicated taxation schemes. Simplify the code and make it understandable in the legislative arena. Somebody somewhere is perpetrating a pretty big con game on the Vermont population. Time to stop the Democrat heavy house and start voting for the conservative Republicans!!
Job accomplished Montpelier ,Drive the Vermonters out with High Taxes , heating green policies and deaf ears .
I know 4people that HAD to put their homes on the market.Enough you have failed Vermonters .This isn’t a party problem ,clearly it’s a plan to harm the hardworking Vermonters by criminal greed .