Vermont gift deed

What a gift deed does in Vermont

A gift deed transfers property with no money changing hands, and it says so on its face. Stating the donative intent matters: it can support a transfer-tax exemption in states that tax transfers and it documents that the recipient paid nothing, which is exactly what a recorder, an assessor, and later the IRS will want to see. Mechanically it operates like a quitclaim. Immediate, and without title warranties.

A gift deed operates like a quitclaim deed but states that the transfer is a gift. In Vermont a gift is taxed on the property's fair market value unless it is between spouses, parent and child (or child's spouse), or grandparent and grandchild (or grandchild's spouse) (32 V.S.A. §§ 9601(6), 9603(5)).

The Vermont law behind this deed

Vermont has no section written specifically for gift deeds. The instrument runs on the general conveyancing and recording statutes below, which is why the requirements here look like those for any other deed in the state.

When Vermont property owners use a gift deed

• Give a house or land to a child or grandchild
• Transfer property to a sibling or parent for no payment
• Record that a transfer is a gift, for tax and title records
• Make a charitable gift of real estate

What Vermont requires on the deed

These are the execution and formatting rules town and city clerks enforce. Getting any of them wrong is the usual reason a deed comes back in the mail.

How to complete and record it in Vermont

1. 1Find your current deedYou need the legal description from it, word for word. If you can't find your copy, the Town or City Clerk can provide one, usually for a few dollars.
2. 2Identify everyone by full legal nameNames must match the current deed and government ID exactly, middle names included. A mismatch creates a gap in the chain of title that shows up years later at closing.
3. 3Complete the deedDeedly builds it with the wording, notary certificate, and 3-inch first-page margin used for Vermont deeds.
4. 4Sign in front of a notaryBring photo ID. Wait to sign until you are in front of the notary: you have to appear before the notary anyway, and signing there leaves no question about who signed.
5. 5Complete Form PTT-172, Vermont Property Transfer Tax Return (file it online in myVTax, or on the paper form if you file fewer than five returns a year)Vermont requires this alongside the deed, including for exempt transfers. Your filing packet explains which boxes apply to your situation.
6. 6Record it with the Town or City ClerkFile in the town where the property is located and pay the recording fee. Each town or city clerk decides whether to accept electronic recording (27 V.S.A. § 624). If you prepared the deed yourself, plan to record in person or by mail. Keep the stamped receipt. It fixes your priority date.
7. 7Update insurance and tax recordsA change of ownership can affect your homeowner's policy, your homestead or senior exemption, and in some states the assessed value. Do this within a few weeks.

What it costs in Vermont

Vermont charges a property transfer tax of 1.47% generally (1.25% plus a 0.22% clean water surcharge); on the new owner's principal residence, 0.5% of the first $200,000 (no surcharge) and 1.47% above that; on a home fit for year-round use that will not be the new owner's principal residence or a long-term rental, 3.62% (3.4% plus the surcharge). Customarily paid by the grantee. The tax is figured on the price paid, or on fair market value for a gift. A life estate or lady bird deed is valued as the interest transferred, using the grand list value and the IRS factor for the owner's age (32 V.S.A. § 9601(6)). If the deed divides a parcel, attach the Act 250 Disclosure Statement (32 V.S.A. § 9608). If the land is enrolled in Current Use, say so on the return; a land use change tax lien can follow the land, and a new owner who wants to stay enrolled must apply within 30 days after recording.

Exemptions that commonly apply to a transfer like this: transfers between spouses or civil union partners for no consideration (32 V.S.A. § 9603(5)), gifts for no consideration between parent and child or child's spouse, or grandparent and grandchild or grandchild's spouse (32 V.S.A. § 9603(5)), transfers into a trust to the extent it benefits you or those relatives, and transfers from that trust back to them for no consideration (32 V.S.A. § 9603(5)), deeds that confirm or correct an earlier recorded deed, for no added consideration (32 V.S.A. § 9603(4)), changes in the form of ownership with no change in who owns it beneficially (32 V.S.A. § 9603(6)), and transfers under a divorce decree dividing the couple's real estate (32 V.S.A. § 9603(19)). You have to claim the exemption. The recorder won't apply it for you.

Where to record it in Vermont

Vermont deeds are recorded with the Town or City Clerk in the town where the property sits, not where you live. There are 247 towns in Vermont.

Each town or city clerk decides whether to accept electronic recording (27 V.S.A. § 624). If you prepared the deed yourself, plan to record in person or by mail.

Recording offices we cover in Vermont: Burlington, Essex, South Burlington, Colchester, Rutland, Bennington, Essex Junction, Rutland Town. See all Vermont recording offices.

What a gift deed does NOT do

Being honest about the limits is more useful than a sales pitch. Every one of these catches somebody out.

• The recipient takes your original cost basis, not the current market value. A later sale can produce a large capital-gains bill that inheriting the property would have avoided.
• A gift over the annual exclusion requires you to file IRS Form 709, even if no tax is due.
• It is irrevocable once delivered and recorded. You can't take the property back if the relationship changes.
• Gifting a property within Medicaid's look-back period can create a penalty period for long-term-care eligibility.

Quirks of Vermont law that catch people out

• Vermont records deeds with the town or city clerk of the municipality where the land lies, not with the county. There are 247 town and city clerks. Deeds for land in one of Vermont's few unorganized towns or gores go to the county clerk (27 V.S.A. § 403).
• Every Vermont deed needs a Property Transfer Tax Return (Form PTT-172), even when the transfer is exempt, and the town clerk cannot record the deed without it. File it online in myVTax or, if you file fewer than five returns a year, on the paper form delivered with the deed. The clerk charges $15 to receive it. Pay any tax to the Vermont Department of Taxes (online or with Form PTT-173), not to the town, within 30 days of the transfer.
• If you are married and the property is your home, your spouse must sign and acknowledge the deed too, even if your spouse is not on title (27 V.S.A. §§ 141, 349).
• Vermont eliminated the witness requirement in 2004. A notary alone is sufficient today.
• Vermont is one of the few states with a lady bird deed statute, the Enhanced Life Estate Deed Act (27 V.S.A. chapter 6). The deed is subject to property transfer tax when recorded, valued as a remainder interest, unless an exemption applies (27 V.S.A. § 654(d); 32 V.S.A. § 9601(6)).

How to hold title in Vermont

When two or more people who are not spouses take title and the deed says nothing more, Vermont presumes a tenancy in common, which means no automatic survivorship (27 V.S.A. § 2(a)). A deed to spouses is not covered by that rule. If you want the survivor to take the whole property, the words have to be on the deed. Forms of co-ownership available in Vermont: tenancy by the entirety (married couples and civil union partners), joint tenancy with right of survivorship, and tenancy in common.