2023 Vermont Statutes › Title 32 - Taxation and Finance › Chapter 236 - Tax on Gains From the Sale or Exchange of Land › § 10002. Land and residences

§ 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.)