Vermont Land Gains Tax Return (Form Lg-2) Instructions For Seller (Transferor) (Page 2 of 3) in pdf

agricultural/forest land in §3752 and continues to meet that

surveying expenses that are directly connected with the sale

definition for at least six years after the transfer.

of this parcel. The amount of land gains tax reported on this

return may not be claimed as a selling expense. The total

6d Seller’s Principal Residence Exemption - Sale of

selling expenses for property that was held by the seller for

up to ten acres of land (or up to 25 acres if required by a local

less than one year may not exceed 12% of the selling price

zoning ordinance) that was occupied by the seller as a

entered on Line 9.

principal residence. If the entire parcel is exempt from tax, the

seller is not required to file this return. The seller may claim

Line 12 - Itemize all capital costs of acquiring the land and

the exemption on the Property Transfer Tax Return.

land improvements (such as roads, sidewalks, sewer and

water systems). Attach an itemized list by description and

6e Affordable Housing Exemption - Land sold to an

cost. Also include the amount of any property transfer tax and

organization that qualifies under section 501(c)(3) of the Internal

legal fees paid by the seller when the seller acquired the land.

Revenue Code, meets the “public support” test of section

509(a)(2) of the Code, and has as one of its stated purposes to

Line 13 - Enter the capital cost of all structures, including both

provide affordable housing is exempt from the tax if the land is

the cost of acquisition and the cost of subsequent

sold within 12 months by the organization to a buyer who is

improvements. Do not include any personal property such as

qualified under an affordable housing program for the buyer’s

furniture. Do not include non-capital expenses such as taxes

principal residence. However, if the land is not transferred within

and interest unless capitalized under IRC §266.

12 months or not transferred to a qualified buyer for occupancy as

Line 16 - To determine the percentage that the seller’s gain

the principal residence, the tax on both transfers (to and from the

bears to the seller’s basis, divide Line 15 by Line 14. If the

organization) shall be due from the organization. If the

result is not a whole number, round upwards to the next

organization transfers the land within 12 months but there is no

highest whole percentage.

dwelling on the land and the buyer fails to complete and occupy

a principal residence within two years, the tax on the first transfer

Line 17 - If you are reporting the gain from the sale of land only

shall be due from the organization and the tax on the second

(no buildings), enter the amount shown on Line 15.

transfer shall be due from the buyer.

If the transfer includes a building, complete Schedule A and

Line 7 - Check the boxes that describe the transaction. If you

enter the amount shown on Line 28. See instructions for

check “other,” please explain.

Schedule A.

Line 8a - Enter the date the seller acquired the property that is

If an exemption from tax was claimed on Line 6, complete

being sold. If the seller tacked the holding period of another

Schedule B and enter the amount shown on Line 35. See

person, enter the date the seller acquired the property on Line

instructions for Schedule B.

8(a) and enter the total holding period on Line 8(c).

If the entire parcel is exempt from tax, enter zero.

Line 8b - Enter the month, day and year the seller transferred

title to the land. The transfer (but not the granting) of an option

Line 18 - Enter the single flat rate of tax that applies to the

is considered a transfer of title to land. The sale or exchange

transaction, based on the seller’s holding period (Line 8c)

of shares in a corporation or other entity is also considered a

and the percentage which the seller’s gain bears to the

transfer of title to land if it effectively entitles a purchaser to use

seller’s basis (Line 16), using the following table:

or occupy land. In the case of a contract for deed, enter the

date consideration first passed to the seller under the

Years Land Held by Gain, as a Percentage of Basis

contract. A mere promise to purchase land and amount paid

Transferror (Line 8c)

(Line 16)

as earnest money or amount paid in deposit or escrow, to

which the seller has no immediate right, do not constitute the

0-99% 100-199% 200% or more

passing of consideration.

Less than 4 months

60%

70%

80%

Line 8c - Enter the period of time the property was held as

4 months, but less than 8

35%

52.5%

70%

determined under the Internal Revenue Code. A spouse who

8 months, but less than 1 year

30%

45%

60%

acquires property by reason of death or divorce may add to his

1 year, but less than 2

25%

37.5%

50%

or her holding period the period of time the property was held

2 years, but less than 3

20%

30%

40%

by the other spouse or by both spouses. The holding period of

3 years, but less than 4

15%

22.5%

30%

one spouse alone before the creation of a tenancy by the

4 years, but less than 5

10%

15%

20%

entirety may be added to the holding period of the tenancy by

5 years, but less than 6

5 %

7.5%

10%

the entirety.

Line 19 - Multiply Line 17 by Line 18 to determine tax. If the

Line 9 - Enter the total sales price of both land and buildings.

sale qualifies for the affordable housing exemption as stated

The sales price includes all consideration paid or to be paid,

in the instructions for Line 6e, please remit one-half of the tax

including the amount of any liens on the property that are not

due.

removed at the time of transfer.

Line 19(a) - If the buyer assumes a tax liability based upon a

Line 10 - Itemize those selling expenses that may be used to

purchaser’s principal residence or builders exemption,

reduce the seller’s gain for federal income tax purposes, such

calculate the potential tax liability. If total acreage is 10 acres

as legal fees, sales commissions, advertising costs and

or less, multiply Line 15 by Line 18. If the total acreage

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

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