Vermont’s PTT is authorized by 32 V.S.A. §§ 9601–9619.[1] The buyer (called the “transferee” in the statute) is the party legally responsible for payment under §9611, though the seller commonly coordinates the filing at closing.[2] The return — Form PTT-172 — must be filed with the town or city clerk in the municipality where the property is located, along with payment voucher PT-173, within 30 days of the transfer date.[3]
1 Determine the Taxable Value
The PTT is calculated on the property’s “value” as defined in 32 V.S.A. §9601.[1] For a standard arm’s-length sale, “value” is the full cash consideration paid by the buyer plus any mortgages or liens on the property that the buyer assumes and that are not paid off by the seller at closing. The logic is the same as with most other state transfer taxes: if you take over the seller’s $40,000 mortgage in addition to paying $260,000 in cash, you have received $300,000 of value and the PTT applies to all of it.
For gift transfers or transfers with no monetary consideration, “value” is the fair market value (FMV) of the property on the date of transfer. A parent handing a deed to a child for $1 cannot avoid PTT by recording a $1 sale price — the FMV applies. However, as we cover in Step 3, many family gift transfers qualify for a full exemption so no PTT is owed at all.[1]
For controlling interest transfers — where a buyer acquires 50% or more of an entity (LLC, corporation, partnership) that owns Vermont real property — “value” is the FMV of the underlying property multiplied by the percentage interest being transferred. A buyer acquiring 60% of an LLC that owns a $500,000 building pays PTT on $300,000 (60% × $500,000), not on the full building value.[1]
Taxable Value = Sale Price + Assumed Mortgages / Liens
Example A — $300,000 Principal Residence Purchase, No Assumed Debt
A buyer purchases a single-family home in Burlington for $300,000 cash. The seller’s mortgage is discharged at closing; no debt assumed.
Taxable Value: $300,000 + $0 = $300,000
Example B — $300,000 Vacation Home Purchase, Assumed Mortgage
A buyer purchases a lakefront cabin in Stowe — a year-round property they will use as a vacation home, not as their primary residence. Sale price $275,000 cash, plus the buyer assumes a $25,000 existing mortgage on the property.
Taxable Value: $275,000 + $25,000 = $300,000
2 Classify the Property Use After Transfer
Vermont’s PTT rate depends entirely on what the buyer intends to do with the property after the transfer — not what the seller used it for. The rate structure has three tiers, and choosing the wrong one can mean a very large difference in tax.[1]
- Principal Residence — The buyer will occupy the property as their primary home within one year of transfer. This qualifies for the lowest rates (0.5% on first $200,000, 1.25% on excess). If the buyer obtains a qualifying government-backed loan, the first $250,000 is fully exempt.
- Year-Round Non-Principal Residence — The property is structurally capable of year-round occupancy (heated, winterized, etc.), but the buyer will NOT use it as their primary home and will NOT rent it out as a landlord. This is the classic Vermont vacation home or investment property scenario, and it triggers the highest rate of 3.40% on the full value.
- General Rate (all other) — Seasonal homes not fit for year-round use, commercial buildings, vacant land, agricultural property, and year-round homes that will be rented to tenants (where a landlord certificate is required) all use the general rate: 1.25% base plus the 0.22% surcharge.
The “will be rented” distinction matters: A buyer purchasing a year-round home as a rental property does not pay the 3.40% rate. Because a rental requires a landlord certificate, it is excluded from the 3.40% tier and instead pays the general 1.47% rate. Only an owner who holds a year-round property purely for personal use without occupying it as a primary residence triggers the higher rate.[1][4]
| Property Type | Base Rate | Surcharge | Effective Total |
|---|---|---|---|
| Principal Residence — first $200,000 | 0.50% | None (exempt) | 0.50% |
| Principal Residence — excess over $200,000 | 1.25% | 0.22% | 1.47% |
| PR — Qualified Financing (VHFA/USDA/Homeland) first $250,000 | 0% | None | 0% (exempt) |
| Year-Round Non-PR (vacation/investment, not rented) | 3.40% | 0.22% | 3.62% |
| General — seasonal, commercial, land, agricultural, rented | 1.25% | 0.22% | 1.47% |
| Minimum tax (any taxable transfer) | $1.00 | ||
Example A — Principal Residence Classification
The Burlington buyer intends to move in and live in the home as their primary address. Principal Residence classification applies. Rate: 0.50% on first $200,000, then 1.47% on any excess.
Example B — Year-Round Non-PR Classification
The Stowe cabin is structurally winterized and available year-round. The buyer already owns a primary home in Massachusetts and will use the cabin as a vacation retreat — no rental income intended, no landlord certificate needed. Year-Round Non-PR classification applies. Rate: 3.62% on the full $300,000 value.
3 Check for Exemptions
Before any calculation begins, the calculator checks whether the transfer qualifies for a full exemption under 32 V.S.A. §9603.[5] If an exemption applies, PTT is $0 — though Form PTT-172 is still required on every deed regardless of exemption. The form must be filed with the clerk with Line E checked and the applicable exemption code entered.
The most commonly encountered exemptions are:
- Family transfer without consideration (Code 05) — Transfers between spouses, parents and children, and grandparents and grandchildren where no monetary consideration is paid are fully exempt. The key is “without consideration” — if a parent sells to a child at a reduced market price but money does change hands, the exemption does not apply and PTT is owed on the full consideration.[5]
- Divorce settlement (Code 06) — Court-ordered transfers between divorcing spouses are exempt.
- Foreclosure / deed-in-lieu (Code 18) — Transfers between the borrower and the primary mortgagee (lender) in connection with a foreclosure or deed-in-lieu are exempt. A bank taking back title through foreclosure pays no PTT on that acquisition.[5]
- Government transfer (Code 01) — Transfers to or from the U.S. government, the State of Vermont, or any municipal subdivision are exempt.
- Mortgage / security deed (Code 02) — A deed recorded solely to secure a debt (a traditional mortgage) does not convey title and is exempt.
- LLC formation / dissolution (Code 14) — Tax-free contributions to or distributions from an LLC or partnership under IRC §721 are exempt.[5]
- Corporate reorganization (Code 09) — Mergers, consolidations, and subsidiary-to-parent transfers qualifying under IRC §368 are exempt.
- Farmland / open-space conservation (Code 10) — Transfers to qualifying nonprofit organizations for conservation purposes are exempt or deferred.
Example A — Family Gift Without Consideration (Code 05)
A parent transfers a Vermont vacation property to an adult child by gift deed, with no money changing hands and no mortgage assumed. FMV of the property is $200,000.
Fully exempt — PTT = $0. EXEMPT CODE 05 Form PTT-172 must still be filed with the town clerk, with Line E checked and code 05 entered.
Example B — Foreclosure Deed (Code 18)
A Vermont lender takes back a residential property via foreclosure judgment. The deed is recorded transferring title from the former homeowner to the bank, with a $150,000 outstanding loan balance.
Fully exempt — PTT = $0. EXEMPT CODE 18 Form PTT-172 required; exemption code 18 cited. No tax is owed by either party on the foreclosure transfer itself.
4 Calculate the Base Property Transfer Tax
For taxable transfers, the base PTT is computed by applying the appropriate rate or rates from Step 2 to the taxable value from Step 1. Principal residence purchases use a two-bracket system; all other property types use a single flat rate on the full value.
For a principal residence without qualifying financing, the calculator splits the value at $200,000. The first $200,000 is taxed at 0.50%. Everything above $200,000 is taxed at 1.25%. Note that the $200,000 threshold was raised from $100,000 effective August 1, 2024, under Act 181 of 2023.[6]
If the buyer is financing through a qualifying program — a VHFA (Vermont Housing Finance Agency) mortgage, a USDA rural development loan, or a Homeland Grant — the first $250,000 of the purchase price is fully exempt from PTT (exemption code 99). Only the amount above $250,000 is taxed at 1.47%.[1][3] This is a significant benefit for first-time buyers and lower-income purchasers using these programs.
Principal Residence (standard): PTT base = (first $200,000 × 0.50%) + (excess over $200,000 × 1.25%) Year-Round Non-PR / General: PTT base = Full value × rate (3.40% or 1.25%)
Example A — $300,000 Principal Residence, No Qualifying Financing
Taxable value $300,000. Principal residence — two-bracket calculation.
First $200,000 × 0.50% = $1,000.00
Excess $100,000 × 1.25% = $1,250.00
Base PTT = $2,250.00
If this buyer had a VHFA qualifying mortgage: first $250,000 would be exempt, and only $50,000 × 1.25% = $625 base PTT would apply — a saving of $1,625 in base tax alone before the surcharge.
Example B — $300,000 Year-Round Non-PR, Flat Rate
Taxable value $300,000. Year-round non-PR — single flat rate.
$300,000 × 3.40% = $10,200.00
Base PTT = $10,200.00
This is more than four times the base PTT on a principal residence of the same price. The 3.40% rate reflects Vermont’s policy of taxing second homes more heavily than primary residences.
5 Add the Clean Water Surcharge
Vermont levies a Clean Water Surcharge of 0.22% on all taxable property transfers under 32 V.S.A. §9602.[1] This surcharge funds Vermont’s clean water and stormwater infrastructure programs. It is calculated on the same taxable value as the base PTT — but with one important exception for principal residences.
For principal residence buyers, the Clean Water Surcharge applies only to the portion of value that exceeds $200,000 (or $250,000 for qualifying financing buyers). The first $200,000 — which is taxed at the reduced 0.50% rate — is explicitly exempt from the surcharge. This means a buyer paying $180,000 for a principal residence pays 0.50% base PTT on the full $180,000 but owes zero surcharge.
For all other property types — year-round non-PR, seasonal, commercial, land, and agricultural — the surcharge applies to the full taxable value with no exemption.
Principal Residence surcharge = excess over $200,000 × 0.22% Year-Round Non-PR / General surcharge = full value × 0.22%
Example A — $300,000 Principal Residence, Surcharge on Excess Only
Surcharge base: $100,000 (the amount above $200,000 only)
$100,000 × 0.22% = $220.00 Clean Water Surcharge
The first $200,000 of this principal residence is completely exempt from the surcharge. If the surcharge had been applied to the full $300,000, it would have been $660 — the principal residence exemption saves $440 in surcharge.
Example B — $300,000 Year-Round Non-PR, Surcharge on Full Value
Surcharge base: $300,000 (full value — no exemption for non-PR)
$300,000 × 0.22% = $660.00 Clean Water Surcharge
6 Total the Tax and File Form PTT-172
The total Vermont PTT is the sum of the base tax (Step 4) and the Clean Water Surcharge (Step 5). If the computed total is less than $1.00 — which can happen on very small transfers — the law sets a minimum tax of $1.00 for any taxable transfer.[1]
The buyer is responsible for paying the total and filing the required paperwork with the town or city clerk in the municipality where the property is located. Payment is due within 30 days of the transfer date.[2] In practice, this payment is always made at the closing table along with recording fees.
Total PTT Due = Base PTT + Clean Water Surcharge (minimum $1.00 for any taxable transfer)
Example A — $300,000 Principal Residence (Full Calculation)
Taxable value: $300,000 | Principal residence | No qualifying financing | No exemption
Base PTT: $200,000 × 0.50% + $100,000 × 1.25% = $1,000 + $1,250 = $2,250.00 BUYER PAYS
Clean Water Surcharge (0.22% on $100,000 excess): $220.00
Total PTT Due = $2,470.00 | Effective rate: 0.823% | Forms: PTT-172, PT-173
Example B — $300,000 Year-Round Non-PR (Full Calculation)
Taxable value: $300,000 | Year-round vacation home | Not rented | No exemption
Base PTT: $300,000 × 3.40% = $10,200.00 BUYER PAYS
Clean Water Surcharge (0.22% on full $300,000): $660.00
Total PTT Due = $10,860.00 | Effective rate: 3.62% | Forms: PTT-172, PT-173
The vacation home buyer pays $8,390 more in PTT than the principal residence buyer on the same $300,000 property — an effective penalty of 2.797 percentage points for non-owner occupancy.
Special Cases Worth Knowing
Qualifying Financing — The $250,000 Exemption VHFA / USDA / HOMELAND
Buyers using a Vermont Housing Finance Agency (VHFA) mortgage, a USDA Rural Development loan, or a state Homeland Grant as their primary financing qualify to have the first $250,000 of the purchase price fully exempt from PTT under exemption code 99. Only the amount above $250,000 is taxed at 1.47% (1.25% + 0.22%). On a $300,000 principal residence purchase, this reduces total PTT from $2,470 to just $735 — a saving of $1,735 at closing.[1][3]
Family Transfers With Consideration
The family gift exemption (code 05) only applies when the transfer is made without consideration. If a parent sells a home to a child at a below-market price — even at a significant discount — and money changes hands, the full PTT applies to the consideration paid. The calculator warns you when a family relationship is selected but a sale price is also entered, because the exemption will not apply in that scenario.[5]
Controlling Interest Transfers
Vermont taxes not only direct deed transfers but also transfers of a controlling interest (50% or more) in any entity — LLC, corporation, or partnership — that owns Vermont real property. The taxable value is the fair market value of the underlying property multiplied by the percentage interest being transferred. If the underlying real property transfer would have been exempt (for example, a qualifying family gift of LLC interests), the controlling interest transfer is also exempt.[1][5]
Seasonal vs. Year-Round Non-PR
The 3.62% rate applies specifically to properties that are fit for year-round occupancy but will not be used as the buyer’s primary residence. A camp or cabin that lacks winterization, heating systems, or insulation adequate for year-round use is classified as seasonal and falls under the general 1.47% rate — not the 3.62% rate. This distinction is made on Form PTT-172 Line H2 (property use after transfer) and can significantly affect the tax calculation for buyers of rustic Vermont properties.[3][4]
Filing Requirements and Forms
Vermont PTT is filed at the town or city clerk’s office, not with the Vermont Department of Taxes directly. The clerk collects the tax and remits the state’s portion. All required forms must be submitted — and payment made — within 30 days of the transfer date.[2]
| Form | Name | When Required |
|---|---|---|
| PTT-172 | Property Transfer Tax Return | Every deed — always required, even for fully exempt transfers |
| PT-173 | PTT Payment Voucher | Submitted with payment to the town/city clerk at recording |
| REW-171 | Real Estate Withholding Return | If the seller is a Vermont nonresident — 2.5% of sale price may be withheld |
Important: Form PTT-172 is required on every deed recorded in Vermont — even those that are fully exempt from tax. For exempt transfers, the buyer checks Line E of PTT-172, enters the applicable exemption code, and files the return with $0 payment. Failing to file PTT-172 — even on an exempt transfer — can cause problems at recording.
References
- 32 V.S.A. §§ 9601–9602 — Vermont Property Transfer Tax: Definitions and Rates.
§9601 defines “value” for PTT purposes, including the rule that full consideration plus assumed liens equals the taxable value, the FMV rule for gifts, the controlling-interest proration formula (FMV × % interest transferred), and the exclusion of private alternative energy sources (e.g., solar). §9602 establishes the 2026 base rates: 0.50% on the first $200,000 for principal residences (0% on first $250,000 with qualifying financing), 1.25% on excess; 3.40% for year-round non-PR properties; and the general 1.25% rate for all other transfers. The current $200,000 principal residence threshold replaced the prior $100,000 threshold effective August 1, 2024 under Act 181 of 2023.
Vermont Legislature: legislature.vermont.gov — 32 V.S.A. §9602 - 32 V.S.A. §9611 — Buyer (Transferee) Liability; 30-Day Deadline.
Establishes that the transferee (buyer) is the party primarily liable for payment of the Vermont PTT. Requires that the tax be paid and Form PTT-172 filed within 30 days of the date of the conveyance. In practice, payment is almost always made at closing by the settlement agent on behalf of the buyer.
Vermont Legislature: legislature.vermont.gov — 32 V.S.A. §9611 - Vermont Department of Taxes — Form PTT-172 (Property Transfer Tax Return) and Instructions; Form PT-173 (Payment Voucher).
The official tax return required on every deed recorded in Vermont. The instructions detail the rate calculation methodology (Lines J4–J7 of the form), the $200,000/$250,000 bracket thresholds, exemption code entries (Line E), the qualifying financing exemption code 99, property use classifications (Lines H1–H2), and the procedure for reporting controlling interest transfers. Form PT-173 accompanies the payment submitted to the town or city clerk.
Vermont Department of Taxes: tax.vermont.gov/property/ptt - Vermont PTT Quick Reference — Rate Logic and 3.62% Year-Round Non-PR Rule.
Official or quasi-official practitioner quick reference confirming that the 3.40% + 0.22% = 3.62% total rate applies when a property is fit for year-round occupancy and the buyer (a) will not occupy it as a principal residence and (b) will not be renting it out as a landlord. Properties that will be rented to tenants fall back to the general 1.47% rate. Land-only transfers always use the general 1.25% base rate regardless of intended use.
Vermont Dept. of Taxes / Town of Wilmington PTT Quick Reference; VT DofT property tax guidance - 32 V.S.A. §9603 — Vermont PTT Exemptions.
Lists all exemptions from the PTT. Key exemptions include: §9603(1) government transfers; §9603(2) mortgage/security deeds; §9603(5) family transfers without consideration (spouse, parent-child, grandparent-grandchild); §9603(6) divorce settlements; §9603(9) corporate reorganizations (IRC §368); §9603(14) LLC formation/dissolution (IRC §721); §9603(18) foreclosure/deed-in-lieu transfers between borrower and primary mortgagee; and conservation transfers to qualifying nonprofits. Even exempt transfers require Form PTT-172 to be filed with the clerk.
Vermont Legislature: legislature.vermont.gov — 32 V.S.A. §9603 - Vermont Act 181 of 2023 — Amendment Raising PR Threshold (Effective August 1, 2024).
The legislation that updated the principal residence preferential rate threshold from the prior $100,000 first-bracket limit to the current $200,000 limit, and updated the qualifying financing exemption threshold from $110,000 to $250,000. The new thresholds apply to all transfers recorded on or after August 1, 2024. All calculations in this guide reflect the post-Act 181 thresholds.
Vermont Legislature Act 181 (2023 session): legislature.vermont.gov — Act 181 of 2023 - 32 V.S.A. §9602 — Clean Water Surcharge (0.22%).
Establishes the 0.22% Clean Water Surcharge applicable to all taxable Vermont property transfers, with the express exclusion that no surcharge applies to the first $200,000 of a principal residence purchase (or the first $250,000 for qualifying financing buyers). The surcharge is in addition to the base PTT rates and funds Vermont stormwater and clean water programs. Effective total rates incorporating the surcharge are: PR excess — 1.47%; year-round non-PR — 3.62%; general — 1.47%.
Vermont Legislature: legislature.vermont.gov — 32 V.S.A. §9602 - Vermont Department of Taxes — Form REW-171 (Real Estate Withholding).
Governs Vermont’s real estate withholding requirement: when a Vermont property is sold by a nonresident seller (individual or entity), the buyer is required to withhold 2.5% of the gross sale price and remit it to the Vermont Department of Taxes as an advance payment of the seller’s Vermont income tax on any gain. This withholding obligation applies to the buyer regardless of the buyer’s residency status and is separate from the PTT. The seller may apply for a withholding waiver if no Vermont tax will be owed.
Vermont Department of Taxes: tax.vermont.gov/property/rew
Disclaimer: This guide is for general informational purposes only and does not constitute legal or tax advice. Vermont PTT rules are complex and fact-specific. Always consult the Vermont Department of Taxes (tax.vermont.gov) or a qualified Vermont real estate attorney before closing. Rates and thresholds reflect Vermont law as amended by Act 181 of 2023, effective August 1, 2024, and current as of 2026.