Fillable Form Lg-1 - Vermont Land Gains Withholding Tax Return (Page 3 of 3) in pdf

years to a buyer who will occupy it as a principal residence. (If the land

Line 9a and the number of acres or square feet that are subject to tax on

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

Line 9b.

parcel must meet these three conditions.) In addition to claiming the

Only ten acres of land qualify for the seller’s or purchaser’s principal

exemption on Line 8, the builder must file three Certificates of Principal

residence exemption or the builder’s exemption, unless local zoning

Residence Construction (Form LG 1.3, 1.4 and 1.5). The person buying

requires more than ten acres for residential property. If so, the minimum

from the builder must indicate on a subsequent Property Transfer Tax

acreage specified in the ordinance may be exempted, up to a maximum

Return that the property will be used as the buyer’s principal residence.

of 25 acres.

Line 8c - Agricultural Exemption - If this exemption is claimed, identify

When the purchaser’s or seller’s principal residence exemption is

which type by checking Box 1 or Box 2.

claimed for a dwelling used in part for non-qualifying purposes, reduce

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

the exempt area by the proportion that the square footage of the dwelling

parent, stepparent, brother, sister or child. The buyer must use the land

used for non-qualifying purposes bears to the total square footage of the

as agricultural land for a period of time which, when added to the time the

dwelling. For example, if a five-unit apartment building is sold, and only

land was used as agricultural land by the transferor, equals or exceeds

1/5 of the building will be occupied by the buyer as a principal residence,

six years. To qualify as a farmer, an individual must earn at least one-half

the buyer may claim exemption for only 1/5 of the ten acres that would

of his or her gross annual income from the business of farming.

otherwise qualify for exemption, or two acres. Attach a separate sheet

Agricultural land must be at least 25 acres or produce an annual gross

showing the computation of the number of taxable acres or square feet.

income of $2,000 from the sale of farm crops in one of two, or three of the

Line 10 - To qualify as an installment sale, the land must have been held

five, preceding calendar years.

by the seller for at least one year; the total land gains tax liability must

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

exceed $2,000; and the payments must be made directly to the seller in

and direct use by that farmer, and which, upon transfer, but for the

installments after the date of closing. A sale financed by a mortgage,

acreage, meets the definition of agricultural or forest land in §3752 and

deed of trust, or other financing arrangement in which the seller is paid in

continues to meet that definition for at least six years after the transfer.

full on the date of closing is not an installment sale.

Line 8d - Seller’s Principal Residence Exemption - Sale of up to ten

If the sale qualifies as an installment sale, a separate withholding return

acres of land (or up to 25 acres if required by a local zoning ordinance)

is required for each payment, including amounts paid at closing. On Line

that was occupied by the seller as a principal residence. The buyer

10a, enter the amount of this principal payment. If this is the first

cannot claim this exemption for withholding purposes unless the seller

withholding return filed for this sale, attach a copy of the promissory note

has claimed the exemption on a Vermont Land Gains Tax Return. Note:

or other documentation establishing the dates and amounts of

Check this box only if a portion of the land is subject to tax. If the entire

payments. Divide Line 9d by Line 6 and enter the result on Line 10b.

parcel is exempt from tax, the buyer is not required to file this return. The

Multiply Line 10a by Line 10b and enter this amount on Line 10c.

seller may claim the exemption on the Property Transfer Tax Return.

Example: Seller sells land and buildings for $60,000, of which $15,000

Line 8e - Affordable Housing Exemption. An organization that

is attributable to taxable land. Buyer is required to pay $12,000 at closing

qualifies under section 501(c)(3) of the Internal Revenue Code and also

and $4,800 per year for ten years thereafter. At closing, the amount

meets the “public support” test section 509(a)(2) of the Code and also has

subject to withholding is $3,000:

as one of the stated purposes of the organization to provide affordable

$15,000 (Line 9d)

housing may qualify for one of two exemptions:

$60,000 (Line 6)

x $12,000 (Line 10a) = $3,000

1. If the land will be held by the organization for 6 years or more

For each subsequent payment, the amount subject to withholding is

following the sale, then only one-half of the tax otherwise

$1,200:

imposed is due. If the organization does not hold the land

for at least 6 years, the organization is liable for the

$15,000 (Line 9d)

remainder of the tax.

$60,000 (Line 6)

x $4,800 (Line 10a) = $1,200

2. If the organization sells the land within 12 months of the

Line 11 - If this is an installment sale, enter 10% of Line 10c on Line 11c.

transfer to a buyer who qualifies under an affordable

If the seller has obtained advance certification of the amount of tax due,

housing program and such buyer occupies a dwelling on the

enter the number of the Commissioner’s Certificate and the amount of

land as the principal residence as required by 32 V.S.A.

withholding required under that certificate. In all other cases, enter 10%

§10002(b), no tax is due on the transfer to the organization.

of Line 9d on Line 11c. If the sale, qualifies for the affordable housing

However, if the organization fails to transfer the land within

exemption, as stated in Line 8e instruction, please remit one-half of tax

12 months to a qualified buyer, the organization is liable for

due if applicable.

the tax due on the original transfer and the transfer by the

If the seller is simultaneously filing a Vermont Land Gains Tax Return

organization. Similarly, if the land is transferred without a

(Form LG-2) and paying the full amount of tax due, check the appropriate

dwelling and a qualified buyer fails to complete and occupy

box. Under those circumstances, the buyer is not required to pay a

a principal dwelling within 2 years of purchase from the

withholding tax; if the seller fails to pay the full amount due, however, the

organization, the organization is liable for the tax on the first

buyer will be liable for the deficiency, up to 10% of the purchase price of

transfer and the buyer is liable for the tax on the subsequent

the land.

transfer.

Line 9 - If the entire parcel is subject to tax, enter the sales price

attributable to land on Line 9d. If the entire parcel is exempt from tax,

enter zero on Line 9d. If only a portion of the land is exempt (Line 7) from

the land gains tax, enter the total number of acres or square feet sold on

Form Lg-1 - Vermont Land Gains Withholding Tax Return Page 3

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