2018 Luxury Market Report Q1-Q3
2018 Luxury Market Report Q1-Q3
A property tax is a levy on property that the owner is required to pay, with rates set as a percentage of the home value. Property assessments include two components-the improvement or building value, and the land or site value. Your property taxes help to fund local programs such as schools, fire stations, and municipal governments like select boards.
EDUCATION TAX RATE
The Homestead Education Tax Rate is based primarilyï¿½on the education spending per equalized pupil of all the pupils residing in your town. Many town districts are also members of union school districts. Each town and union school district will have a tax rate based on its spending per pupil. For towns with multiple school districts, the tax rate is a combination of those rates.
LAND GAINS TAX
This tax applies on gains made from the sale or exchange of Vermont land held by the seller less than six years. The land gains tax rate is inversely proportionate to holding period. The tax applies to only the gain attributed to land (not buildings or structures). This tax is not imposed on land which is part of the first ten acres beneath or contiguous to the sellers principal residence, or land purchased to build buyers principal residence (some conditions apply). Land may include timber and timer rights sold providing the underlying land is also sold within six years (some conditions apply).
LAND GAINS WITHHOLDING TAX
Anyone who purchases Vermont property that was held by the seller for less than six years is required to withhold 10% of the purchase price of the land from the seller and remit it to the Department of Taxes immediately after the sale on Form LGT-177, Vermont Land Gains Withholding Tax Return To Be Completed By Buyer (Transferee).ï¿½ï¿½If a seller is a nonresident of Vermont, the buyer is required to withhold Vermont income tax, and the Vermont Withholding Tax Return for Transfer of Real Property must also be filed with the Department onï¿½Form RW-171, Vermont Withholding Tax Return for Transfer of Real Property.
A purchaser who fails to withhold or remit the tax is personally liable for the amount required to be withheld, plus statutory interest and penalty.
PROPERTY TAX ADJUSTMENT
Property Tax Adjustments assist many Vermont homeowners with paying their property taxes. You may be eligible for a property tax adjustment if you meet these eligibility requirements:
Theï¿½homestead declaration,ï¿½property tax adjustment claim, and household income form, are generally submitted together with an income tax return. The credit is calculated by comparing property taxes paid based on property value to the amount allowed based on household income.ï¿½The difference (if any) is applied as a credit to the property tax bill in the following tax year as State Payments. The maximum credit amount is $8,000. ï¿½ï¿½
PROPERTY TRANSFER TAX
This is a tax on the transfer of title to real property based on the purchase price paid by the buyer. A Property Transfer Tax Return must be filed with a town clerkï¿½whenever a deed(s) showing the transfer of title to real property is delivered to a town clerk for recording. A town clerk cannot record any deed unless it is accompanied by a completed Property Transfer Tax Return. ï¿½You may useï¿½myVTaxï¿½to file your return. Tax preparers who file more than five returns or certificate requests per calendar year are required to use myVTax for filing.ï¿½If you file fewer than five returns, you mayï¿½order a specific form onlineï¿½or by contacting us atï¿½(802) 828-2515.
REAL ESTATE WITHHOLDING TAX
This tax requires taxpayers withhold 2.5% of the consideration for real property being sold by a non-resident of Vermont. The withholding is required to insure that the appropriate amount of taxes on any gain resulting from the transfer is paid when the non-resident seller files a Vermont income tax return.ï¿½
(Property Valuation and Review staff examineï¿½the income tax returns associated with withholding to determine final tax liabilities relative to the withheld amounts).
USE VALUE APPRAISAL PROGRAM OR CURRENT USE
Theï¿½Use Value Appraisal Programï¿½(Current Use) is the valuation and taxation of farm and forest land based on its remaining in agricultural or forest use, instead of its value in the market place. ï¿½This program keeps Vermont's agricultural and forest land in production, slows the development of these lands, and achieves greater equity in property taxation on undeveloped land.
This program includes conservation land owned by qualifying nonprofit organizations and the exemption from all property taxes of eligible farm buildings. When an application is approved and recorded in the municipal land records, a lien is established on the enrolled land to recover a land use change tax should all or any portion of the enrolled land become developed. ï¿½Currently, more than 18,000 properties are enrolled, totaling more than 2.3 million acres which represents approximately 1/3 of Vermont's total land area.
Rewind a few years and most people shopping for a home would scoff at taking a virtual reality tour, applying for a mortgage on their mobile phone or purchasing a house without stepping foot in it. But millennials, the newest crop of homebuyers, grew up with a smartphone attached to their hip and are much more comfortable buying everything from clothing to a house over the Internet. According to a Redfin survey released earlier this year 45% of millennial homebuyers made offers sight-unseen in 2017.
And despite talk the younger generations aren’t purchasing new homes, the National Research Association found consumers aged 36 and younger represented the biggest share of home buyers, 34% of all purchases, last year.
Millennials, as well as their older counterparts, start their home searches online. But they are willing to take it a step further and the real estate fintechs know that. They are rolling out virtual reality tours, speedy online mortgage applications and live streaming open houses.
VR Tours Popular Among Buyers
Take VR tours for starters. In January Coldwell Banker Real Estate polled 3,000 U.S. adults to gauge their interest in virtual reality home tours. It found that 77% of survey respondents want to take VR tours of homes before visiting while 84% want to see video footage. They don’t just want to get an idea of the layout and condition of the home. More than two-thirds or 68% said they want to use VR to see how their current furniture looks in the home. What’s more 62% of survey respondents said they would go with a real estate agent who made VR technology available. Recognizing the demand, Sotheby's International Realty offers customers 3D and virtual reality tours of its properties. Sotheby's said on its Website that the 3D and VR Tours are made possible by placing cameras throughout the home. Users can view the 3D tour directly from the Sotheby's website and VR tours via a mobile device that is paired with a VR headset.
Real estate has also gotten more social with some real estate agents using Facebook to host real-time open houses via Facebook Live. RE/MAX, the real estate company, recently highlighted one agent in Winnipeg, Manitoba that uses Facebook Live for his open houses, giving viewers a real-time tour of the house and simultaneously answering questions from the comment section. The live stream is recorded automatically, turning the open house into a virtual tour that can live indefinitely online.
Mortgages Get Speedier Thanks To Tech
Technology isn’t only disrupting the home search process but it is changing the way people apply for and are approved for mortgages. Take Quicken Loans’ Rocket Mortgage mobile service that enables a would-be borrower to apply for a mortgage in minutes. The loan closes in less than a month, something most traditional lenders can’t do. Rocket Mortgage is a pioneer in this area but it's not alone. Lenda, the mortgage lending fintech that’s been in the market since 2014, boasts the ability for borrowers to fill out the the application in minutes and for the loan to close in two weeks. The company told American Banker earlier this year the goal is for a mortgage transaction to take thirty minutes. Lendra is able to speed up the process by having the underwriting begin as the customer fills out an application. Lendra also automates as much of the work as possible including income and employment verification. It enables customers to log into their bank accounts from the platform to get the bank statements necessary for the mortgage, furthering speeding up the process. Other fintechs going after the mortgage market include Social Finance, otherwise known as SoFi and Roostify.
Voice Command Real Estate Searches Coming
Still in the early phases of deployment, a new technology making its way into the real estate market are chatbots. Thanks in part to Amazon.com’s Alexa and Apple’s Siri voice activated assistants, the ability to interact with the Internet and devices via voice is growing in popularity. That hasn’t been lost on a handful of technology companies that are working on apps to enable users to search real estate listing and get information via natural language commands. Ask DOSS, a startup out of Houston Texas, is working on an intelligent personal assistant that is said will be similar to Siri, but exclusive to the real estate market. Users will be able to ask the app questions about a property and get instant answers 24 hours a day. The company is developing the app for the residential real estate market but said on its website the next phase of development will be answering questions and displaying listings for commercial properties. A beta launch of the app went live in October of 2017. The company is working on a relaunch and is tight-lipped about when it will bring it to the market.
With all this technology at the ready, fintechs are transforming the way we buy homes. The older generations may not be ready for it, but millennials and those younger are. They have come to expect technology to drive all aspects of their lives including the home purchasing process.