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by Don Keelan
Deep inside the 171-page tome of the recently adopted ACT 181(H.687) legislation was a section to extract more money from non-residents who purchase Vermont homes after August 1, 2024. Sections 73 and 74 detail the extraction of funds from those who conceivably have it.
The Act’s primary purpose “relat(es) to community resilience and biodiversity protection through land use.” What had received most, if not all, of the media and political attention was the Act’s changes to the State’s environmental law, Act 250.
The tax, referred to as the Vermont Property Transfer Tax, is assessed on all property transfers and is customarily paid by the buyer at closing.
Prior to August 1, 2024, the tax on a $500,000 sale to a nonresident would have been $7,250.
Under the new law, after August 1, 2024, a resident would pay a tax of $5,410, while a nonresident would pay $18,100 for the same house, priced at $500,000. This amount is an increase of $10,850 from what the nonresident would have owed under the previous law. According to several local real estate brokers, nonresidents are scrambling to close on their Vermont second home before August 1st.
I realize how desperate Vermont is for money. I am not surprised that the Legislature would go after another ‘deep pocket’ source of funds. Just to confirm this point, the legislation was adopted in mid-June at the Legislature’s veto-override session, with Sections 73 and 74 to take effect seven weeks later. Do you sense the urgency?
The tax part of the legislation is just another indication that our legislators are sticking it to the nonresident homeowners in Vermont. The fact of the matter is that the second homeowners contribute so much to the State.
In southwestern Vermont, many of our nonprofit organizations have been the beneficiaries of the generosity of nonresident homeowners. Calculating the second homeowner’s years of financial contributions, patronage, and service to the nonprofit sector would be near impossible.
The sustainability of many cultural institutions would be nonexistent without the second homeowner. The employment of service firms, construction contractors, landscape service firms, food vendors, and others owe much of their operational success to this sector of Vermont homeowners.
It is not only in Vermont that the wealthy are targets. In an article in the July 6, 2004 Wall Street Journal, Carol Platt Liebau and Frank Ricci noted, “Connecticut’s affluent residents should be seen not as assets to be exploited but as partners who can change the state for the better. Our wealthiest residents are generous in pursuing the common good.”
Why the area’s nonprofit organizations, which depend so much on the second homeowner, have not spoken out on the recently passed Vermont Property Transfer Tax can be rationalized because they wish not to disturb another significant source of their funding: Vermont state grants.
I realize that for many legislators who represent geographic areas of Vermont, the existence of second homeowners in their districts is of little significance. Therefore, assessing the second homeowner with a substantial increase is of no concern: if they can afford a second home, they can afford the tax increase.
What is unacceptable is for the Legislature to place a target on their backs and go after them for more and more taxation. One only needs to know what was also buried in H.887: an increase in the short-term rentals tax from 9% to 12%, beginning on August 1st.
I doubt the target will be removed anytime soon with so many Progressives in the Legislature.
Some fifty years ago, the State helped those in need while, at the same time, it was able to fund certain school districts needing financial help (The Foundation Formula) and take care of the State’s infrastructure. Today, the State funds many social programs, i.e., housing, health care, homelessness, addiction recovery, daycare, etc. Meanwhile, it faces a huge unfunded pension liability, billions in school deferred maintenance, and, more recently, flood damage recovery.
The Legislature and the Administration need to realize that increasing tax rates will not be sufficient to cover the State’s current plans. Vermont needs to be more welcoming and increase its tax base, not its tax rates.
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Categories: Commentary
Spoken like a true flatlander, if you don’t like it Don, go back to your liberal hellhole in New York City. You are “100% an asset to be exploited.”
“Why the area’s nonprofit organizations, which depend so much on the second homeowner” Oh thank you so much for your money, here I am at the base of Killington with my head in my hands wondering how I’m going to feed my family with my two Masters Degrees .You sound like a liberal talking down to marginalized groups reminding them how lucky they are to have you. Piss off
Wow Chris, you sound like the true liberal, Don’s right, Vermont tried to tax food and clothing earlier this year. As far as your two masters degrees, they are highly overrated today, who ever needed a masters to teach K-6 the 3 RRR’s, oh thats right, we’d rather teach DEI, ESG and involve climate change into mathematics!
I know, “taxes for thee and not for me”, that’s your motto?
Hey Bill, what the hell do you do with yourself other than sound jealous? Maybe if someone taught you right you wouldn’t be licking the boots of some out-of-stater dangling his money over your head telling you how lucky you are that he decided to grace us with his presence. “oh Donny, thank you for spending your money here!!! We’re so lucky to have you.” (That’s you) Then again, pride is a Vermont value that you obviously lack.
Anytime you want, we can compare bank accounts and tax burdens, cuz you do make me laugh and I need another one
to all of us, stop being petty. its a spending problem that montpelier has!
how many new boards and consultants have they hired, universal meals at school, i would ask any legislator who passed that insane bill to go to a lunch room at a school an see how much food gets thrown away. of course no measuring stick or re evalutation with every one of these new bills. i voted yes so i can sleep at night but i wont be able to turn on my power because i cant afford it
TWO masters degrees ….. ooooooh!!
What is the nutrition value of a Masters Degree and how do you cook it?
hey hey two masters Chris, I seemed to have gotten more likes that you did, so guess what, you come off a skewed, and you wanna compare bank accounts, tax burdens, while you’re down in K town wondering how to make ends meet, what’s next, a golf challenge, you sure as heck sound more foolish now.
I’ve gotta be honest, I think this is a great way to raise more money without adding even more to the ever-increasing tax burden on the shrinking Vermont middle class. In fact, I think the legislature should go further. What?!? Let me explain.
How much will your property taxes increase this year, assuming you’ve done the whole homestead thing? A lot, right? More than previous years I would guess. A percentage that many might call excessive? I know I do.
Now, think. Who buys second homes in Vermont? Out of staters – MA, CT, NJ, NY. Are they buying shacks? No. Fixer-uppers? No. Trailers? No. They’re buying high-dollar, top of the market properties for the most part. On a river, on a lake, on or near the slopes. My point is, they’re doing so because they can AFFORD it. You think paying a one-time $20k fee bothers them? No, it’s nothing more than an “initiation fee”, like at their posh country club. They are NOT going to stop coming, and the state is NOT going to lose any revenue or tourism because of that.
What the legislature should have done is kept homestead property taxes the same, but massively raised the second home tax rate. Trust me, they have the money, they’ll still keep coming, and they don’t care. They treat it as “A cost of doing business”.
The demoprogs in the legislature want to squeeze even more out of golden geese who are actual productive citizens in order to provide more free housing and free stuff for those who contribute nothing positive and are perpetual parasites. The socialist legislators and non-profits with their hands on the public purse strings seek “equity justification” to demonize those with wealth who come from out of state and want to legitimately buy a piece of Vermont but have no problem using that booty to attract vagrants from out of state to take advantage of all the free stuff, while reducing the quality of life here through their misdeeds and bad habits. That’s what a majority of Vermonters consistently vote for.
Tax the rich, feed the poor. Trickle down economics. All labor is done to have 1/3 of it taken away to support a giant ponzi scheme, which is now throwing fiat currency onto a giant life sucking debt – not even covering the interest on said debt.
I look at who is making money these days, while others are losing it no matter how hard they labor, no matter they follow the rules, no matter how much or for how long they paid into this system. Who is making money these days and how? Perhaps it is those who are profiteering and deceiving those who are barely making enough money these days. Perhaps it is those who have LLC’s, 5013c’s, and bank accounts offshore? Perhaps it is a global fraud scheme. The USA is flush with ever changing digit ledgers, money appearing out of grants, trusts, and military budgets with seemingly no limits? The grand illusions of prosperity right around the corner. Some say we are in a Depression now – some of us are…while others, not so much.
Is Vermont actually allowed to charge a greater transfer tax because the buyer is out-of-state? And what if the buyer is moving to Vermont full-time? Seems like an effort to lower housing prices for Vermonters but you’re also potentially hurting tourism money.
Vermont and the Feds have a definition of your “primary residence”, being the place you spend 6 months and a day per year in actual residence, and they certainly can audit that by examining how and where you spend your money.
So far Vermont has gotten away with charging a higher property tax rate on any property above and beyond your “homestead and 2 acres”. That the state is allowed to do that is because no one has apparently challenged it in court, and not sure in this Robin Hood Philosophy state that it could be found illegal or unconstitutional…?
Basic economics says that, if there’s a $10K tax paid by an out-of-state buyer for a VT property, that’s $10K the VT seller could not collect. Claiming the out-of-stater is paying a premium tax is a typical politician shell game.
In some countries, that is the only kind of property tax.
It’s not so much the amount of tax or the source of the tax that’s important – a point consistently missed in the political banter. The point is that the services these taxes pay for are nothing more than snake oil, designed to make the State more dysfunctional. And it’s circuitous. Dysfunction requires more service while the service creates more dysfunction.
Cases in point:
Our public education system is obsolete. It’s a monopolized model created more than 100 years ago. With the innovation common to an educational free market, we could be paying half the current cost of education while getting twice the academic performance.
The healthcare system is dysfunctional in the same way as education.
And then there is the government itself, the fastest growing employment sector in the State, because more and more welfare services require more and more administrators being paid higher and higher salaries and benefits in a monopoly setting.
The people we’re paying to administer these shams are incompetent. Their only justification for continuing the sham can be paraphrased by a recent comment I saw here on VDC by a government special interest spokesperson.
“When will taxpayers realize that the waste and corruption, they see are actually the jobs and livelihoods of their friends and neighbors.”
With friends and neighbors like that, who needs enemies?