Vermont Real Estate Withholding Tax

When Vermont property is sold by a nonresident of Vermont, the buyer is required to withhold 2.5% of the amount paid for the transfer and to transmit this amount to the Vermont Department of Taxes within 30 days of the sale. A nonresident includes someone who once lived in a Vermont property as a primary residence but has already begun living in another state or country.

The amount withheld is considered a payment against the Vermont income tax on the funds received by the seller. If no gain occurred or the amount withheld is more than the tax, the seller can get a refund. A buyer who fails to withhold 2.5% of the amount paid at the closing is personally liable for the tax.

Withholding from a nonresident is not necessary, or may be in a reduced amount, if before the closing the buyer or seller obtains a certificate from the Commissioner of Taxes. These are available if 1) no tax will be due, 2) the seller or buyer has provided adequate security to cover the tax liability, or 3) reduced withholding is appropriate because the 2.5% amount exceeds the seller's maximum tax liability.

For more information on the Vermont withholding tax, call the Vermont Tax Department at 802-828-2777.