What is Tax Prebate, And How Can You Apply For Your Credit?
If you’re purchasing a home in Vermont, the state’s tax prebate program could impact your property taxes. Knowing how it works can help you plan ahead and avoid unexpected costs.
What is a Vermont Tax Prebate?Vermont offers a tax prebate (property tax credit) to residents based on income, rather than the assessed value of their home. Homeowners apply before April 15, and if they qualify, their property tax is reduced for the tax year running from July to June. This benefit applies only to primary residences and can significantly lower annual tax costs.
If you’re buying a home with an existing tax prebate, you can keep the seller’s discount for the remainder of the tax period, as long as you formally request the prebate goes in your favor, and it’s an accepted term of purchase. It’s best to include this request during the negotiations period of your offer to purchase. On Closing Day, you must reimburse the seller for taxes they’ve already paid for the duration of the tax year.
Beyond the current tax period, you’ll need to pay the full tax amount unless you qualify for your own prebate. Many lenders require buyers to prepay up to six months of property taxes at closing, and while eligible homeowners will eventually receive the credit, it can take time.
If the home you’re purchasing doesn’t have a tax prebate but you expect to qualify, you’ll need to pay full taxes for the current period. As long as you own the home by April 1, you can apply for the prebate before April 15 and receive a refund from your lender if you overpaid.
Understanding Vermont’s tax prebate can help you budget effectively and ensure a smoother home-buying process!
In Conclusion
We hope this helps clarify how Vermont’s tax prebate works. Be sure to check with your attorney and lender in advance to stay informed about your estimated closing costs. Closing costs can seem overwhelming, but there’s good news—many lenders allow buyers to negotiate concessions within their contract to help cover these expenses. By including seller concessions in your offer, you may be able to reduce your out-of-pocket costs at closing, making homeownership more accessible and affordable. Plus, a major advantage is that your property taxes are covered at the time of purchase, giving you peace of mind during your first year in your new home!
Form HS-122 – Vermont Homestead Declaration AND Property Tax Credit Claim