Code of Vermont Rules › Agency 10 - AGENCY OF ADMINISTRATION › Sub-Agency 060 - DEPARTMENT OF TAXES › Chapter 038 - HOMESTEAD › Section 10 060 038 - HOMESTEAD

Current through June, 2024
Section 1. 5401(7) [Effective 8/7/04]
				Homestead
(a) Introduction
A statewide education tax is imposed on all homestead and
				  nonresidential property.
				  32 V.S.A. §
												5402(a). However, the tax is
				  imposed at different rates on those two categories of property. Therefore, all
				  property on the education grand list will be classified as either homestead or
				  nonresidential. The basis for this classification is the homestead declaration.
				  Any property that is not homestead property, is nonresidential property.
In order for a property to be classified as homestead
				  property for any tax year, the department of taxes must receive a homestead
				  declaration on or before April 15 n1. On this form, a resident is required to
				  declare his or her homestead as of April 1.
				  32 V.S.A. §
												5410. In the absence of a declaration, the
				  education tax will be billed by municipalities at the nonresidential rate. If a
				  Homestead Declaration is filed late but prior to December 1, the property tax
				  bill will be adjusted but the filer will be subject to a penalty. Declaring a
				  nonresidential property as a homestead will also subject the filer to a
				  penalty.
n1 If April 15 falls on a Saturday, Sunday or holiday, the
				  due date is the next business day. An extension to file the income tax return
				  does not extend the time to file the declaration.
This rule addresses the eligibility requirements for
				  declaring a homestead and issues with respect to what constitutes a homestead.
				  It is authorized by
				  32 V.S.A. §
												5410(e) which provides
				  specific rule-making authority to the commissioner of taxes with respect to
				  homestead declarations; by
				  32
				  V.S.A. §
												3411(3) which
				  provides that the division of property valuation and review adopt rules for the
				  uniform administration of the property tax; and by
				  32 V.S.A. §
												3201(a)(1) which gives the
				  commissioner general rule-making authority with respect to tax
				  administration.
(b)
				Homestead Declaration
Annually, on or before April 15, an individual must declare a
				  homestead if the individual is:
(1)
				domiciled in Vermont; and
(2) owns
				and occupies a dwelling in Vermont as his or her principal dwelling on April 1.
The declaration must be in the form prescribed by the
				  commissioner of taxes.
				  32 V.S.A. §
													5410. The requirements of "domicile" are
				  addressed in Reg. 5811(11)(A)(i).
(c) Definition of Homestead
"Homestead" is defined in
				  32 V.S.A. §
												5401(7) as follows:
(7) "Homestead":
(A) "Homestead" means the principal dwelling
				and parcel of land surrounding the dwelling, owned and occupied by a resident
				individual as the individual's domicile.
(B) The parcel of land surrounding the
				dwelling shall be determined without regard to any road which intersects the
				land. If the parcel of land surrounding the dwelling is owned by a cooperative
				housing corporation incorporated under 11 V.S.A. chapter 14, or owned by a
				nonprofit land conservation corporation or community land trust with exempt
				status under Section
				501(c)(3),
				the homestead includes a pro rata part of the land upon which the dwelling is
				built, as determined by the cooperative corporation, nonprofit corporation, or
				land trust.
(C) A homestead may
				consist of a part of a multi-dwelling or multi-purpose building, including
				cooperative property occupied as a permanent residence by a member of a
				cooperative housing corporation incorporated under 11 V.S.A. chapter 14. A
				mobile home may constitute a principal dwelling for purposes of this
				chapter.
(D) A dwelling owned by a
				trust may qualify as a homestead if it meets the requirements of subsection
				6062(e) of this title.
(E) A
				homestead also includes a dwelling on the homestead parcel owned by a farmer as
				defined under section 3752 of this title, and occupied as the permanent
				residence by a parent, sibling, child, grandchild of the farmer or shareholder,
				partner, or member of a farmer-owner, provided that the shareholder, partner,
				or member owns more than 50 percent of the farmer-owner, including attribution
				of ownership of a parent, sibling, child, or grandchild.
(F) A homestead also includes any other
				improvement or structure on the homestead parcel which is not used for business
				purposes. A homestead does not include that portion of a principal dwelling
				used for business purposes if the portion used for business purposes includes
				more than 25 percent of the floor space of the building.
(d) Principal Dwelling
An individual can only have one homestead.
				  32 V.S.A. §
												5410(a). A mobile home may
				  be a homestead. Second homes and camps are not homesteads and should be listed
				  as nonresidential property on the grand list. A camp may be an exception to
				  this statement if it is in fact the taxpayer's principal dwelling. If it could
				  not be occupied year-round under typical conditions, it does not qualify as a
				  homestead.
A home that is temporarily impossible or impractical to
				  occupy because of major renovation or damage due to natural disaster may still
				  be a taxpayer's principal dwelling as long as no other residence is claimed as
				  the homestead. A dwelling that is being built cannot be claimed as a homestead
				  until it is occupied as the principal dwelling of the owner. New construction
				  does not constitute a dwelling that is temporarily uninhabitable -- rather, it
				  has never been inhabited.
On the other hand, a house that could be occupied year-round
				  is not a homestead simply because the owner spends a considerable amount of
				  time there. Ownership and occupation of a house are not sufficient to make it a
				  homestead. The owner must be domiciled in Vermont and the house must be
				  occupied "as the principal residence" of the individual. See Reg.
				  5811(11)(A)(i) Domicile.
(e) Ownership of the Homestead
(1) Joint Ownership
Spouses and civil union partners who own and occupy a
				  residence together should only file one declaration. With respect to other
				  joint owners who occupy the dwelling as their principal residence, it is only
				  necessary for one owner to file a declaration. If only one of two or more joint
				  owners occupies the dwelling as a principal residence, only that owner should
				  file a homestead declaration. The dwelling will be taxed at the homestead
				  education tax rate.
(2)
				Life Estates
The owner of a life estate interest who occupies the dwelling
				  as his or her principal residence must declare a homestead. The legal
				  instrument granting the life estate is not required to be filed with the
				  declaration, but should be available upon request of the department.
(3) Revocable Trusts
A dwelling held in trust and occupied by the beneficiary of
				  the trust as the principal dwelling should be declared as the homestead of the
				  beneficiary only if:
(1)
				the declarant is the sole beneficiary of the trust,
(2) the declarant or the declarant's spouse
				or civil union partner was also the grantor of the trust, and
(3) the trust is revocable or became
				irrevocable solely by reason of grantor's death. The requirement that the trust
				beneficiary be the "sole" beneficiary is satisfied if a husband and wife or
				civil union partners together are the only beneficiaries of the trust. The
				trust instrument is not required to be filed with the Homestead Declaration,
				but should be available upon request of the department.
(4) Title in Other Entities
When title is held by an entity such as an S corporation,
				  partnership or limited liability company, none of the attributes of ownership
				  are retained by an individual and therefore the property cannot be an
				  individual's homestead. This is true regardless of whether a shareholder,
				  partner or member uses the property as his or her homestead, except in the case
				  of the entities addressed below when they earn more than half of their income
				  from the business of farming.
(5) Farmers
If a dwelling is owned by a farmer and occupied as the
				  permanent residence by a parent, sibling, child or grandchild of the farmer, it
				  is the homestead of the related person and that person must file a Homestead
				  Declaration.
If title to the homestead is held by a corporation,
				  partnership or limited liability company that qualifies as a farmer, and the
				  occupant of the homestead owns more than 50 percent of the corporation,
				  partnership or limited liability company, it is the homestead of the occupant
				  and that person must file a homestead declaration. In determining whether the
				  occupant owns more than fifty percent of the farmer-owner, the ownership
				  interest held by a parent, sibling, child or grandchild of the occupant shall
				  be attributed to the occupant.
To qualify as a farmer, a person must earn at least one-half
				  of his annual gross income from the "business of farming" as that term is
				  defined in Regulation 1.175-3 issued under the Internal Revenue Code of 1986.
				  That regulation provides that:
"The business of farming" means cultivating, operating, or
				  managing a farm for gain or profit, either as owner or tenant. A person who
				  receives a rental (either in cash or kind) which is based upon farm production
				  is engaged in the business of farming. However, a person who receives a fixed
				  rental (without reference to the production) is engaged in the business of
				  farming only if he participates to a material extent in the operation or
				  management of the farm. Forestry or the growing of timber is not the business
				  of farming. Cultivating or operating of a farm for recreation or pleasure
				  rather than a profit is not the business of farming. "Farm is meant in its
				  ordinary, accepted sense and includes stock, dairy, poultry, fish, fruit, and
				  truck farms, and also plantation, ranches, ranges, and orchards. A fish farm is
				  an area where fish are grown or raised, e.g., fed, protected, cared for, as
				  opposed to merely caught or harvested.
Example 1: Elliot owns a farm consisting of 180 acres with
				  two houses, a barn and an equipment-storage shed. He derives 90 percent of his
				  income from operating the farm. Elliot occupies one house as his principal
				  dwelling. His son occupies the other house as his principal dwelling. Both
				  dwellings and the land are homestead property and a homestead declaration must
				  be filed. The barn and storage shed are not homestead property and will be
				  taxed at the nonresidential rate. However, if the farm buildings are enrolled
				  in the Use Value Appraisal Program, classifying the barn and shed as
				  nonresidential would have no impact on the owner's taxes because the taxable
				  value of enrolled farm buildings is zero.
Example 2: Fairfield Corporation owns a dwelling on a
				  100-acre parcel. The entire income of Fairfield is derived from operating a
				  dairy farm on the parcel. Smith owns 75 percent of Fairfield's stock. He
				  occupies the dwelling as his principal dwelling. Smith must file a Homestead
				  Declaration; the 100 acres will be taxed at the homestead rate. Although
				  Fairfield Corporation, not Smith, is the owner of the property, the law
				  recognizes that many farmers operate in a corporate form and makes an exception
				  from the ownership requirement in cases where the occupant and certain related
				  persons own more than 50 percent of the corporation. Structures and buildings
				  on the parcel that are used in the farm business are not homestead property and
				  will be taxed at the nonresidential rate unless it is enrolled in the Use Value
				  Appraisal Program (see note in Example 1 above).
Example 3: Same as above except Smith owns 30 percent of
				  Fairfield's stock. Smith's daughter owns 25 percent. Since together Smith and
				  his daughter own more than 50 percent of the stock of Fairfield, Smith
				  qualifies as a farmer. Smith must file a Homestead Declaration.
(f) Occupation of the
				Homestead
A homestead must be owned "and occupied" by the resident. The
				  law does not specify any requisite number of days that the resident must occupy
				  the dwelling in order for it to qualify as a homestead. An individual's
				  employment may require him or her to spend a majority of days away from the
				  dwelling, but if the individual is domiciled in Vermont, and the dwelling is
				  his or her permanent dwelling, and if no other homestead has been claimed, it
				  constitutes the homestead.
While the law does not specify a requisite number of days the
				  dwelling must be occupied, it requires a declaration of homestead "as of, or
				  expected to be as of, April 1 of the year in which the declaration is made."
				  The fact the owner is temporarily away from the dwelling on April 1 for
				  employment, vacation or a similar reason, does not disqualify the dwelling as a
				  homestead. However, if the property is rented on April 1 so that the owner does
				  not have the right to occupy the dwelling on that date, it cannot be declared
				  as the owner's homestead.
Example 1: Jackson is domiciled in Vermont and owns his
				  principal dwelling in Vermont. On April 1, he is overseas on a temporary
				  assignment for his employer; the assignment lasts from February 1 until the end
				  of the year. He should declare the dwelling as his homestead because he owns it
				  on April 1 and has the right to occupy it on April 1.
Example 2: Smith is domiciled in Vermont. He leaves for
				  Florida on January 2, renting his Vermont dwelling until May 15. He cannot
				  claim it as his homestead because he did not occupy the dwelling on April 1 and
				  he had no right to occupy it.
(g) Parcel
A homestead includes "the parcel of land surrounding the
				  dwelling, determined without regard to any road which intersects the
				  land".
Parcel is defined in
				  32 V.S.A. §
												4152(a)(3) as "all
				  contiguous land in the same ownership, together with all improvements thereon".
				  There is no acreage limitation on a homestead. n2 Accordingly, even if there
				  are buildings or improvements on land contiguous to the homestead that are not
				  homestead property (see section (j) below), the land is part of the homestead
				  and will be taxed at the homestead tax rate.
n2 In this way, a homestead differs from the "housesite"
				  which is relevant to determining an education tax payment or rebate under
				  Chapter 154, Title 32. A housesite is "that portion of a homestead...which
				  includes as much of the land owned by the claimant surrounding the dwelling as
				  is reasonable necessary for use of the dwelling as a home, but in no event more
				  than two acres per dwelling unit; and in the case of multiple dwelling units,
				  no more than two acres per dwelling unit up to a maximum of 10 acres per
				  parcel".
				  32 V.S.A. §
												6061(11).
If a homestead crosses town lines, the property owner must
				  file a Homestead Declaration for each town in which the homestead lies. SPAN
				  numbers are town-specific so each Homestead Declaration will require a
				  different SPAN.
If part of the homestead is enrolled in the Use Value
				  Appraisal Program (Title 32, Chapter 124), the owner should declare the entire
				  property as his or her homestead. The entire parcel is taxed at the homestead
				  rate.
Example 1: Smith is domiciled in Vermont. His principal
				  dwelling is on three acres that are improved by a swimming pool, a detached
				  garage, and a storage shed. All of Smith's property is homestead
				  property.
Example 2: Blackburn's homestead is on a 60-acre parcel. His
				  business, an auto body repair shop with an adjacent paved parking lot, is also
				  located on the parcel. The dwelling and 60 acres are taxed at the homestead
				  rate. The repair shop and parking lot improvement are taxed at the
				  nonresidential rate. Blackburn should indicate business use on his Homestead
				  Declaration.
Example 3: Johnson operates a commercial racetrack on five
				  acres across the road from his principal dwelling. He owns ten acres on the
				  dwelling side. The track is paved and lined with stands for viewing. This is an
				  improvement that is separately valued and taxed at the nonresidential tax rate.
				  The dwelling, the ten acres on which it sits and five unimproved acres across
				  the road are all homestead property.
Example 4: Jackson's principal dwelling is located on a
				  12-acre parcel that crosses a town line. The house and 5 acres are in one town;
				  the other 7 acres are located in the adjacent town. Jackson should file two
				  homestead declarations, each identifying one town and the SPAN assigned by that
				  town. The house and entire twelve acres are taxed at the homestead rate.
(h) Multiple Homes on a Parcel
An individual can only own and "occupy" one principal
				  dwelling. If an individual owns a parcel with two dwellings, only one can be
				  claimed as the homestead on the individual's homestead declaration. However,
				  the entire parcel is included in the homestead n3. If the second dwelling is
				  neither rented nor used for a commercial purpose, it is taxed at the homestead
				  rate.
n3 This rule anticipates a law change that will delete the
				  provision: "If two or more homestead dwellings are located on a single parcel,
				  the value of the parcel allocated to each homestead shall be the total value of
				  the parcel divided by the number of principal dwellings, unless otherwise
				  determined by ownership of record of the land."
If there are two dwellings on jointly owned property and each
				  dwelling is occupied by a co-owner, only one owner needs to file a homestead
				  declaration since it is all one parcel. The entire parcel will be taxed at the
				  homestead rate.
Example 1: Jackson and Corrigan hold joint title to a
				  120-acre parcel with two dwellings. Each occupies one of the dwellings as his
				  principal residence. A Homestead Declaration must be filed for the parcel. This
				  will result in all of the land and the two dwellings being taxed at the
				  homestead rate. Either owner may file the declaration.
Example 2: Same as above except Jackson lives out-of-state
				  and the co-owners rent the second dwelling to a third party. Corrigan must file
				  a Homestead Declaration. Her dwelling together with the land is homestead
				  property. The second house is not homestead and is taxed at the nonresidential
				  rate.
Example 3: Same as example 2 except instead of renting the
				  second dwelling, Jackson uses it as a vacation house. Corrigan must file a
				  Homestead Declaration. Her dwelling together with the land is homestead
				  property. The second house is a building detached from the home but it is not
				  used for business purposes; therefore it is classified as homestead property
				  and taxed at the homestead rate.
(i) Multi-dwellings and Multi-purpose
				Buildings
"A homestead may consist of a part of a multi-dwelling or
				  multi-purpose building, including cooperative property occupied as a permanent
				  residence by a member of a cooperative housing corporation incorporated under
				  11 V.S.A. chapter 14."
(1) Cooperative
				Property. Although a cooperative interest is personal property, the law
				specifically waives the ownership requirement and provides that if such a
				property is occupied as a permanent residence by a member of a cooperative
				housing corporation incorporated under the Cooperative Housing Ownership Act it
				is homestead property.
Example: Elliot belongs to a cooperative that owns 16 units
				  of attached housing on five acres of land. He occupies one of the units as his
				  principal dwelling. He should file a homestead declaration. His unit and one
				  sixteenth of the five acres is his homestead property.
(2) Condominium and Common Interest Property.
				A condominium unit occupied by the owner as his or her principal dwelling is a
				homestead. In addition, the owner's interest in the common elements, such as
				contiguous land, outbuildings and structures, is also homestead property. See
				27 V.S.A. §
												1306 (Condominium Ownership Act);
				27A V.S.A. §
												1-105(a) (Uniform Common
				Interest Ownership Act).
However, any portion of the common elements in which the
				  developer has reserved any development right is a separate parcel that is
				  separately assessed and taxed to the developer and is not homestead property.
				  See
				  27A V.S.A. §
													1-105(b).
Example 1: Goddard owns and occupies as her principal
				  dwelling a condominium located on a 38-acre parcel of common land with a
				  swimming pool and three tennis courts. There are twenty condominiums in the
				  development. The pool and tennis courts are for the use of condominium owners
				  and their guests. The town assesses Goddard for her unit and a one-twentieth
				  interest in the land and improvements because the declaration establishing the
				  condominium community provides that the common elements are owned equally by
				  the unit owners. Goddard should file a homestead declaration. The entire
				  assessed value of Goddard's property is taxed at the homestead rate.
Example 2: Townsend owns and occupies as his principal
				  dwelling one unit in a 200-unit development formed under the Uniform Common
				  Interest Ownership Act. The development includes 100 acres of common property,
				  with an additional 50 acres reserved by the developer. Townsend's homestead is
				  his unit and 1/200 of the 100 acres of common property. The 50 acres reserved
				  by the developer is nonresidential property.
(3) Multi-purpose Buildings. The portion of a
				mixed-use building that is owned and occupied as a principal dwelling is
				homestead property. This could be an apartment building in which the owner
				occupies one unit as her principal dwelling. It could be an apartment in a
				building that contains the owner's business. The owner must file a Homestead
				Declaration for the property that identifies the percentage of the building
				that is used for commercial or rental purposes. (Also see section (j) below.)
Example: Garrett owns a downtown building on one-quarter of
				  an acre. The building has retail space on the first floor. Garrett occupies the
				  entire second floor, which is 40 percent of the building's floor space, as his
				  principal residence. The listers must determine the contributory value of the
				  homestead portion of the building and the contributory value of the
				  nonresidential portion of the building. They may allocate the building's value
				  based on square footage - in this case, 40 percent as homestead property and 60
				  percent as nonresidential property. This is not the only method for allocating
				  value. There may be circumstances that make another allocation method equally
				  or more reasonable. The land value should be listed as homestead
				  property.
(j)
				Detached Buildings and Improvements
A homestead does not include buildings or improvements
				  detached from the home and used for business purposes. Conversely, a detached
				  building or improvement, such as a shed, garage, or swimming pool, that is
				  located on the parcel and not leased or used commercially is homestead
				  property. Whether an improvement qualifies as part of a homestead depends upon
				  how the improvement is used as opposed to what the improvement is. A barn that
				  is used to park the dwelling owner's car may be homestead property, whereas a
				  barn that is used as a gift shop is not. A swimming pool outside the owner's
				  principal residence is homestead property while a swimming pool outside a hotel
				  and used by guests is not homestead property even though the owner lives at the
				  hotel. A declarant should indicate on the Homestead Declaration whether there
				  are commercial buildings or improvements on the parcel.
Example 1: In addition to his dwelling, Jackson has a garage
				  and a barn on the property in which he stores his antique automobiles. The
				  dwelling, garage and barn, as well as the land, qualify as homestead
				  property.
Example 2: Newlon owns a house, which he occupies as his
				  principal dwelling, and commercial garage on 25 acres. He should file a
				  homestead declaration and indicate business use of a structure on the
				  declaration. The garage structure should be valued separately by the listers
				  and it should be taxed at the nonresidential rate. The dwelling and land are
				  taxed at the homestead tax rate.
Example 3: McLean owns a house, which she occupies as her
				  principal dwelling, a horse barn and a riding ring on 60 acres. The barn and
				  ring are used to house and exercise her own horses. All of the property is
				  homestead property.
Example 4: Same as above except, McLean boards horses in the
				  barn as a business. The house and land are homestead property. The barn is not
				  and will be taxed at the nonresidential rate. If the riding ring constitutes an
				  improvement because significant value has been added, e.g., fixtures or surface
				  improvements, it should be listed separately and taxed as nonresidential
				  property. If it is unimproved land, it need not be separately assessed and is
				  taxed at the homestead tax rate.
Example 5: Johnson operates a dairy farm on 100 acres. There
				  are 4 structures on the land -- a barn, a shed for storing farm equipment,
				  Johnson's dwelling and a dwelling Johnson provides to his farmhand. Johnson's
				  dwelling and the 100 acres are homestead property. The barn, shed and farmhand
				  dwelling are nonresidential property since they are used for the business
				  purpose of operating a farm.
Example 6: Elwood owns and occupies a dwelling on 130 acres.
				  There is also a caretaker's house on the property which he provides to his
				  caretaker as part of their employment arrangement. Elwood should declare his
				  dwelling and the 130 acres as his homestead. The second dwelling is not part of
				  his homestead even though it is not used for a business purpose by Elwood.
				  Elwood gave up the right to "occupy" the dwelling in return for the caretaker
				  services. This is true whether rent is actually paid for the dwelling or deemed
				  to be paid as part of the terms of employment.
(k) Business Use of Dwelling
A homestead "does not include that portion of a principal
				  dwelling used for business purposes if the portion used for business purposes
				  includes more than 25 percent of the floor space of the building". A home
				  office, a business workshop, a bed and breakfast operation are examples of
				  business uses of a dwelling. If the portion of the dwelling used for business
				  purposes does not exceed 25 percent of the floor space, there is no requirement
				  to indicate business use on the homestead declaration. If the portion so used
				  exceeds 25 percent, the actual percentage must be reported on the homestead
				  declaration and the entire value attributable to business use is taxed at the
				  nonresidential tax rate.
This diminimus does not apply to either separate structures
				  used for business purposes or to leased portions of the dwelling. This is
				  because the separate structure or leased space is not "occupied" by the owner
				  as a dwelling. In those cases, the entire value attributable to the leased
				  portion of the dwelling or to the separate structure is taxed at the
				  nonresidential rate.
Example 1: Jacksons own a large house, which they operate as
				  a bed and breakfast. They also occupy this house as their principal dwelling.
				  Three of the five bedrooms are leased to guests and guests also use the living
				  room and dining room. The kitchen is used to prepare breakfast for guests, but
				  is not otherwise for guests' use. The Jacksons should file a homestead
				  declaration that indicates the percentage of the house that is used as part of
				  their business. This is the percentage of floor space that the three bedrooms,
				  the living room, the dining room and the kitchen bear to the total floor space
				  of the house. The owners are required to file a federal Schedule C to report
				  their net profit from the business. The percentage reported on the homestead
				  declaration should be the same percentage used to report business use of the
				  home on the federal schedule.
Example 2: Shaughnessey leases an apartment in the house he
				  owns and occupies as his principal dwelling. The apartment takes up 20 percent
				  of the floor space of the house. He should file a declaration and indicate this
				  percentage of rental use. Eighty percent of the dwelling is homestead property;
				  20 percent is nonresidential property.
Example 3: Smith works out of his home. His home office
				  occupies 20 percent of the floor space of the house. He does not need to
				  indicate any business use on his homestead declaration because his office does
				  not exceed 25 percent of the floor space of his principal dwelling.
Example 4: Garrett uses the barn attached to her house as a
				  workshop and retail space for her furniture business. In most cases, the
				  listers will have a separate value on the barn. If this is true, the entire
				  value of the barn would be allocated as nonresidential. If there isn't a
				  separate barn value, then the percentage allocation reported by the taxpayer on
				  the homestead declaration could be used to determine the business allocation.
				  If the taxpayer fails to provide an allocation percentage for business use or
				  the lister disagrees with the taxpayer's percentage, then the listers could
				  choose to do an allocation based on square footage of the entire structure. The
				  property owner may appeal that valuation decision to the listers pursuant to
				  32 V.S.A. §
												4111(g).
(l) Failure to File a Timely Declaration
Failure to file a timely declaration has several
				  consequences. Tax will be imposed on the property at the nonresidential rate.
				  This can be corrected if a declaration is filed before December 1. Regardless
				  of whether the tax bill is corrected to the homestead rate, a penalty is
				  imposed. If the tax was underpaid as a result of late filing, additional tax,
				  interest and a late payment commission may also be due.
(1) Penalty. A homestead owner who fails to
				file a homestead declaration by April 15 is subject to a penalty equal to one
				percent of the education tax on the property. However, if the commissioner
				determines that the failure to file a timely homestead declaration was with
				fraudulent intent, the penalty equals 100 percent of the education tax on the
				property. The penalty shall be assessed and collected by the municipality in
				the same way it collects property tax under Chapter 133 of Title 32. The
				municipality may retain the penalty.
A taxpayer may appeal assessment of the one percent penalty
				  to the listers within 14 days after the date of mailing of notice of the
				  penalty, and from the listers to the board of civil authority and then in the
				  same manner as an appraisal appeal under Chapter 131. A taxpayer who wishes to
				  appeal assessment of the 100 percent fraud penalty must appeal to the
				  commissioner of taxes in the same manner as an appeal under chapter 151 of
				  title 32. n4
n4 Similarly, a taxpayer who wishes to appeal a determination
				  of domicile must appeal to the commissioner of taxes in the manner for appeals
				  under chapter 151 of title 32.
(2) Tax Rate. Declarations filed after the
				April 15 due date will be accepted by the department and the department will
				notify the municipality of the late-filed declaration. If the homestead
				declaration information is filed prior to December 1, the municipality will
				issue the owner a new tax bill reflecting the correct tax rate. If the tax has
				been paid and the corrected bill results in a lowered tax, the municipality
				will refund the overpayment to the taxpayer. Municipalities are not required to
				make refunds due to late declarations until May 15. Any refund due to the
				taxpayer from the municipality shall be net of the one percent penalty.
A corrected bill does not extend the date on which the
				  original billed amount is due. Therefore, if the corrected rate resulted in
				  additional tax and the payment date has passed, the municipality may assess
				  interest and a commission under
				  32 V.S.A.
				  §
													1674(2) with the
				  additional tax.
If a declaration is not filed prior to December 1, the
				  municipality is not required to reduce the homestead owner's education tax to
				  reflect a lower homestead tax rate. The owner is liable for the one percent
				  penalty and also for any underpaid tax and interest. Any additional tax and
				  interest due will constitute a penalty to be assessed and collected by the
				  municipality in the same manner as property tax under Chapter 133 of Title
				  32.
Any increase or decrease in education tax assessed against a
				  property owner that is the result of a declaration filed prior to December 1
				  will be reflected in the net amount of education tax due to or from a
				  municipality pursuant to
				  32 V.S.A. §
													5402 and 16 V.S.A. § 4028.
(m)
				Non-residential Property Declared as Homestead
If the property identified in a Homestead Declaration is not
				  the taxpayer's homestead, the taxpayer is subject to a penalty equal to one
				  percent of the education tax on the property. If the commissioner determines
				  that the declaration was made with fraudulent intent, the penalty shall be in
				  an amount equal to 100 percent of the education tax on the property. The
				  penalty is imposed and collected by the municipality in the same manner as
				  property tax under Chapter 133 of Title 32.
The taxpayer is also liable for the difference between the
				  education tax calculated at the homestead rate and at the nonresidential rate
				  if the latter is higher together with any interest and a commission under
				  32 V.S.A.
				  §
												1674(2).
(n) Abatement of Penalties
The legislative body of a municipality may abate all or a
				  portion of the one percent penalty in cases of hardship. Hardship means:
(1) an owner's inability to pay as certified
				by the commissioner of taxes in his or her discretion; or
(2) failure to file a homestead declaration
				by April 15 or the filing of a homestead declaration with respect to
				nonresidential property was due to:
(a)
				full-time active military duty of the declarant outside the state;
(b) serious illness or disability of the
				declarant;
(c) serious illness,
				disability or death of an immediate family member of the declarant
				32 V.S.A. §§
													3201(a) (1),
				5401(7),
				5410(e)