April 28, 2010 Leave a comment
(Montpelier, VT) by John Biondolillo
As they finished their work on bill (H.485) dealing with the current use program, the Senate Finance Committee made some changes to the version passed by the House earlier this year. There will likely need to be a conference committee between the two bodies to iron out differences. The proposal needs to address a 1.6 million dollar cut to the program for this year’s budget and budgets going foreword indefinitely.
In order to find the $1.6 million needed for this years budget legislators have decided to impose a one time fee of $127.27 to each owner enrolled in the program. To maintain the savings in future budgets the proposal changes the way the property transfer tax and the change of use tax are assessed when parcels come out of the program and is sold. Property sold out of current use are now taxed at a pro-rated rate, these changes would tax property at a fair market rate.
For example an owner of a 100 acre parcel valued under current use program at $50k ($500 per acre) decides to sell 5 acres. Currently the property owner would be taxed on the pro rated value of the 5 acres which means they would pay taxes on $2,500 ($500 per acre x 5 acres =$2,500). With the change to being assessed at fair market value those same 5 acres could be worth say $3k per acre that would mean the property owner would be taxed on $15k worth of value ( $3,000 x 5 = $15,000). The end result is a significantly higher tax burden for those selling property out of the current use program.
Part of the House passed version, the moratorium on new parcels being enrolled into the program was taken out of the Senate’s proposal. Applicants currently in the pipeline can withdraw their applications and will be reimbursed fees incurred because of the changes being proposed to the program. The new rules and tax increases imposed on the program will go into effect November 1st 2010. Up until this deadline owners of property enrolled in current use can withdraw parcels from the program under the current guidelines.
If you are looking to buy or sell Vermont land, woodlots, timber land or development parcels call a BCK agent today to discuss your options and current Vermont market conditions.