Vermont Land Gains Tax Return (Form Lg-2) Instructions For Seller (Transferor) printable pdf download

VERMONT LAND GAINS TAX RETURN (Form LG-2)

INSTRUCTIONS FOR SELLER (TRANSFEROR)

GENERAL INFORMATION

Line 6 - Check the appropriate box if an exemption is

claimed. The seller may not claim the purchaser’s principal

WHO IS REQUIRED TO FILE A VERMONT LAND GAINS

residence exemption, the builder’s exemption, or the

TAX RETURN? The land gains tax is a tax on the gain from

agricultural exemption unless the buyer has claimed the

the sale or exchange of Vermont land that was held for less

exemption on a Land Gains Withholding Tax Return filed with

than six years. The definition of land may include the sale of

the Department of Taxes. If you check “other,” please explain.

timber or timber rights. Anyone who sells Vermont land that

Purchaser’s Principal Residence Exemption-

was held by the seller for less than six years is required to file

Sale of up to ten acres of land on which the buyer will occupy

this return within 30 days after the sale, even if no tax is due. If

as a principal residence within one year of purchase, or if no

the buyer claims the builder’s exemption, the

dwelling exists on the land, the buyer will construct and

agricultural exemption, or the purchaser’s principal

occupy a principal residence within two years from purchase.

residence exemption, the seller must file this return

If a local zoning ordinance requires more than ten acres for

within 30 days to establish the amount of the buyer’s

residential property, then the acreage specified in the

liability in the event the conditions for exemptions are

ordinance will be exempted, up to a maximum of 25 acres. A

not met.

“principal residence” includes a multi-family dwelling of four

Timber/ Timber Rights. When the underlying land is sold

units or less if at least one unit will be used as the buyer’s

separately from timber or timber rights and both sales occur

principal residence. A dwelling may qualify as a principal

within 6 years of the purchase, the gain on the sale of the

residence even though the resident maintains an office or

timber or timber rights shall be combined with the gain or loss

retail store in the dwelling. In order for a pre-existing dwelling

on the sale of the land to determine the land gains tax liability.

to qualify as a purchaser’s principal residence, the purchaser

If the sale of the land occurs first, and land gains tax on the

must occupy the dwelling as his principal residence within

sale has become due, before the timber or timber rights are

one year of the date of purchase.

sold, the taxpayer shall recompute and file an amended Land

6b Builder’s Exemption - Sale of up to ten acres of land

Gains Tax Return to include the gain or loss from the sale of

on which the buyer (a builder) will build a dwelling that will be

timber and timber rights sold within 6 years of purchase. This

the principal residence of the next purchaser. If local zoning

rule shall apply if the underlying land is or was part of more

requires more than ten acres for residential property, the

than 300 acres of contiguous land owned by the same

acreage specified in the ordinance will be exempted, up to a

taxpayer. If the land is subject to and in compliance with a

maximum of 25 acres. The builder must begin construction

forest management plan approved under 32 V.S.A. §3755(b)

of a dwelling within one year, complete construction within

or 10 V.S.A. §2623(2), neither timber nor timber rights are

two years, and sell the dwelling within three years to a buyer

taxable.

who will occupy it as a principal residence. (If the land is sold

Exceptions to Filing Requirement - The seller is not

as more than one parcel by the builder who acquired it, each

required to file this return if the buyer or seller claims one of the

parcel must meet these three conditions.) In addition to

exemptions on the Property Transfer Tax Return. See the

claiming the exemption on the Land Gains Withholding Tax

instructions for Line R on page 4.

Return, the builder must file three Certificates of Principal

Residence Construction (Forms LG 1.3, 1.4, and 1.5). The

person buying from the builder must indicate on a subsequent

LINE-BY-LINE INSTRUCTIONS

Property Transfer Tax Return that the property will be used as

the buyer’s principal residence.

Lines 1 and 2 - Enter the full name, mailing address and

social security or federal identification number of each

Agricultural Exemption - If this exemption is

transferor and transferee.

claimed, identify which type by checking Box 1 or Box 2.

Line 3 - Check which describes the property interest being

Box 1. Sale of agricultural land by a farmer to the farmer’s

sold. A lease is subject to tax if it is for a period of at least 50

grandparent, parent, stepparent, brother, sister or child. The

years (including possible renewals) or if the lessee has a

buyer must use the land as agricultural land for a period of

purchase option and the right to construct a building or

time which, when added to the time the land was used as

structure or make major capital improvements.

agricultural land by the transferor, equals or exceeds six

years. To qualify as a farmer, an individual must earn at least

Line 4a - Enter the street address and town. If the property is

one-half of his or her gross income from the business of

located in more than one town, list all towns.

farming. Agricultural land must contain at least 25 acres or

produce an annual gross income of $2,000 from the sale of

Line 4b - Enter the acreage or number of square feet being

farm crops in one of two, or three of the five, preceding

sold.

calendar years.

Line 5 - Check the boxes that describe the transaction.

Box 2. Sale of 25 acres or less to a farmer (32 V.S.A. §3752)

for active and direct use by that farmer, and which, upon

transfer, but for the acreage, meets the definition of

Vermont Land Gains Tax Return (Form Lg-2) Instructions For Seller (Transferor)

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