Instructions for Vermont Homestead Declaration and Property Tax Credit Claim and Household Income Schedule

DUE DATE: APRIL 18, 2023

Use the following dropdown list to select a question:

Line A1 School Property Account Number (SPAN):

This is a unique identification number assigned by the town. Enter the 11-digit number printed on your property tax bill located in the Housesite information. Be sure to verify your SPAN as your property tax credit is credited to the property tax bill for the SPAN entered on this form.

Line A2 Business Use of Dwelling:

If there is no business use or the business use is 25% or less - enter 00.00%.
If more than 25% business use - enter the percentage. Generally, the business use percentage is the same as reported on your Federal income tax return. Examples for calculating business use (a) 1,800 square foot home with 635 square feet used as a home office and inventory storage. The 35.28% is business use (635/1,800) is rounded to 35.00%. The portion used for business is taxed at the nonhomestead rate. (b) 1,200 square foot home with 250 square feet used as a home office. The 20.83% business use (250/1,200) is rounded to 21%. Because this is less than 25%, enter 00.00%.

Line A3 Rental Use of Dwelling:

Enter the percentage of your home that you rent to another person. There is no 25% allowance for rentals. All rental use must be reported. The rental use percentage is generally the same percentage as reported on your Federal income tax return. Example for calculating rental use is: 1,800 square foot home with 365 square feet rented. The 20.27% rental use (365/1,800 is rounded to 20.00%. Eighty percent of your home will be taxed at the resident rate.

Line A4 Business or Rental Use of Improvements and Other Buildings on the Property:

Check the "No" box if there are no other improvements or other buildings on your parcel other than your home or garage. Check the "Yes" box if an improvement or building is used for business or rented. Examples: garage is used to do auto repair, buildings used for farming, there is a second dwelling on the property rented out, a building used for retail or wholesale business.

Lines A4 - A7 Special Situations:

Check the box if one of these situations applies.

Trust Ownership A dwelling owned by a trust is not the homestead of the beneficiary unless
The claimant is the sole beneficiary of the trust and:

1. The claimant or the claimant's spouse was the grantor of the trust, and the trust is revocable or became irrevocable solely by reason of the grantor's death;
or
2. The claimant is the parent, grandparent, child, grandchild or sibling of the grantor, the claimant is mentally disabled or severely physically disabled, and the grantor's modified adjusted gross income is included in the household income calculation.

The term. "sole beneficiary" is satisfied if the homeowner and the spouse/civil union partner are the only beneficiaries of the trust. A property owned by an irrevocable trust cannot be a homestead except as stated in (1) above. The trust document does not have to be attached to the Property Tax Credit Claim but must be available for review upon Department request.
Life Estate A person who holds a life estate interest in a property that he or she occupies as a principal residence may make a Property Tax Credit Claim as if the life estate holder was the owner of the property. The deed does not have to be attached to the Property Tax Credit Claim but must be available for review upon Department request.
Homestead property crossing town boundaries
You will need to file a separate Vermont Homestead Declaration in each town.
Residing in a dwelling owned by a related farmer
If a dwelling is owned by a farmer or farm corporation, the dwelling is on the farm property, and it is occupied by a parent, child, sibling or grandchild of the farmer as his or her principal residence, the dwelling qualifies as a homestead. The person(s) occupying the property as his or her principal residence files his or her own declaration and uses the SPAN on the property tax bill. For corporate ownership, together the related parties (parent, child, sibling or grandchild) must own more than 50% of the corporate stock to be eligible to claim a homestead. The person(s) occupying the property as his or her principal residence files his or her own declaration.

Line B4 Housesite Value:

Use the housesite value found on the 2022/2023 property tax bill of the property you own and occupy on April 1, 2023.

BUYING AND SELLING PROPERTY
Buying on or before April 1, 2023 If you buy the property that you will use as your principal home, you are responsible for filing a 2023 homestead declaration on this property by the due date.
Selling the Property On or Before April 1, 2023 If you filed Form HS-122, but sell the property on or before April 1, 2023, you are responsible for withdrawing the homestead declaration and property tax credit claim. You will be responsible for repayment of a property tax credit if issued. Use Form HS-122W available at http://tax.vermont.gov or calling 802-828-2505. NOTE: If you purchase, own and occupy a new home by April 1, 2023, you are the one responsible for filing Form HS-122 for your new home.
Selling the Property After April 1, 2023 If you filed the Form HS-122, but sold the property after April 1, 2023, the property tax credit amount is allocated to the seller upon closing unless the parties agree otherwise. The property tax credit is your payment on the 2022/2023 property taxes and needs to be considered at the closing when pro-rating the property taxes.
NEW CONSTRUCTION
New Construction New homestead construction where the property was built after April 1, 2022 and is owned and occupied as a principal residence on April 1, 2023, file Form HS-122 Section A Homestead Declaration. Eligible homeowners may make a 2023 property tax credit claim. The claim will be based on the value as of April 1, 2022 of the parcel, site improvements or structures in existence and up to two acres of land.

Line B5 Housesite Education Property Tax:

Enter the education property tax shown on the 2022/2023 property tax bill.

Line B6 Housesite Municipal Property Tax:

Enter the municipal property tax shown on the 2022/2023 property tax bill. Homeowners with $47,000 or less household income may be eligible for a credit on the municipal property tax.

Line B7 Ownership Interest:

Any person who meets eligibility requirements to file a Homestead Declaration should be included in the ownership interest. For example, if all owners are members of the household, occupying the property as their principal residence, enter 100%. If some owners are not members of the household, meaning they do not occupy the property as their principal residence, then ownership interest is the percentage of ownership for household members only. For example, if there are four owners but only two of them occupy the property as their principal residence, enter 50%.

Line B9 Lot Rent for a Mobile Home:

If applicable, if you rent a lot in a privately owned mobile home park, obatin Form LRC-147, Statement of Mobile Home Lot Rent, Co-ops, and Trust, from your landlord and enter the amount of Allocable Rent.

Line B10 Education Property Tax Allocated from Land Trust, Cooperative, or Nonprofit Mobile Home Park:

Obtain a statement from your land trust, cooperative or nonprofit mobile home park showing the education and municipal property tax allocable to your housesite. You may be asked for a copy of the statement, Form LRC-147.
A Cooperative is a housing corporation organized under 11 V.S.A. Chapter 14.
A Land Trust is a nonprofit corporation or community land trust exempt under Section 501(c)(3) of the Internal Revenue Code. The corporation's purpose must be the creation or retention of affordable housing for lower income Vermonters and its bylaws must require that such housing be maintained as affordable housing for lower income Vermonters on a perpetual basis.
A Nonprofit Mobile Home Park is a corporation exempt under Section 501(c)(3) of the Internal Revenue Code, or its wholly owned subsidiary which has as its purpose the preservation of housing for low income families; or a housing cooperative organized under 11 V.S.A. Chapter 14.

Line B11 Municipal Property Tax Allocated from Land Trust, Cooperative, or Nonprofit Mobile Home Park:

Line B12 Education Tax on contiguous property:

If you own contiguous property, you can use the property taxes from that parcel if the property tax bill for your dwelling has under 2 acres or part of the dwelling or a building such as garage is on the contiguous property. Example: (1) Your dwelling is on .75 acre of land and you own 5 acres contiguous to the dwelling land. The property taxes on 1.25 acres can be entered here and is eligible for property tax credit. (2) Your dwelling is on 1 acre and your garage is on 3 acres that is contiguous to your dwelling. The property taxes on the garage and .75 acre can be entered here and is eligible for property tax credit.

Line B13 Municipal Property Tax on contiguous property:

HOUSEHOLD INCOME - Refugee, Asylee, or Asylum seeker

Check this box if you temporarily hosted a refugee, asylee, or asylum seeker in your home during 2022. Do not include their income on this form

Line a HOUSEHOLD INCOME - Cash public assistance and relief

Enter all payments from the State of Vermont Agency of Human Services except for foster care payments, difficulty of care payments and fuel assistance. The first $6,500 of refugee settlement payment is excluded.

Line b HOUSEHOLD INCOME - Social security, SSI, disability, railroad retirement, and veterans' benefits (taxable and nontaxable)

Enter payments from Social Security as reported in Box 5 of your SSA-1099 (this box adjusts for any repayment of Social Security benefits you were required to make) or from federal Form 1040, U.S. Individual Income Tax Return. Social Security benefits also include SSI and SSDI payments. Enter all railroad retirement from RRB-1099 and any benefits recieved under veterans acts.

Line c HOUSEHOLD INCOME - Unemployment compensation and workers' compensation

Enter the full unemployment compensation shown on Federal Form 1099-G plus any workers' compensation you received.

Line d HOUSEHOLD INCOME - Wages, salaries, tips, etc.

Enter the income shown in Box 1 of the W-2. Also report Federal Form 1099-MISC issued for nonemployee compensation if this is income not included as part of Line 1, Business Income. See exclusions in Household Income section before completing this line.

Line e HOUSEHOLD INCOME - Interest and dividend

Enter the income required to be reported on Lines 2b and 3b of Federal Forms 1040 plus the nontaxable interest not required to be reported on Federal Form 1040.

Line f HOUSEHOLD INCOME - Interest on U.S., state, or municipal obligations

Enter the income reported on federal Form 1040 and all interest income from federal, state or municipal government bonds. This includes interest taxed at the federal level but exempted for Vermont income tax purposes and interest not taxed at the federal level.

Line g_h HOUSEHOLD INCOME - Alimony, support money & child support, cash gifts

Enter the total received for alimony and support money. Support money includes payment of housing expenses for household member or other financial assistance that makes it possible for the household member to live in the homestead or rental unit.

List all child support payments received in the calendar year as well as all cash gifts. Cash gifts include any and all cash received by you or other houshold members, as well as cash equivalent. Cash equivalents include gifted stocks, bonds, treasury obligations, certificates of deposit or other instrument convertible to cash. The first $6,500 of cash gifts to the household is exempt from household income.

Line i-j HOUSEHOLD INCOME - Business income & taxable and non taxable capital gains. If the amount is a loss enter zero

If there is a business loss, enter zero (0). For taxpayers filing Married Filing Jointly, where both spouses have business income or loss from sole proprietorships, enter the amount from Federal return 1040, or enter zero (0) if negative, in the Claimant column.

Report nontaxable capital gains from sale of home and gains from Federal return 1040 Schedule D: a capital loss carryforward cannot offset a current year capital gain. Add back 1040 Schedule D Lines 6 and 14 to Line 16. This cannot be less than zero.
For purposes of household income, a capital loss carryforward cannot offset a current year capital gain.
Exception: A business loss may offset a capital gain on the sale of the business' property provided

(1) the loss and capital gain are for the same business; and
(2) the Internal Revenue Service requires the capital gain to be reported; and
(3) the business loss and capital gain from the sale of the business' property both occurred in the same tax year.

If the offset of the capital gain by the loss creates a negative amount, enter zero (0).
A capital loss cannot offset business income.
If netting a loss creates negative capital gain, enter 0.

Line k HOUSEHOLD INCOME - Taxable pensions, annuities, retirement fund distributions

Enter the income from retirement plans, deferred compensation plans and annuities as reported on Federal Form 1040. Household income includes nonqualified distributions from retirement and deferred compensation plans and both taxable and nontaxable federal pension and annuity benefits.

Line l HOUSEHOLD INCOME - Rental and royalty income

Enter the income from each rental property you own as reported on Federal Schedule E, Part I. Each rental property stands on its own. A loss generated by one property may not be used to reduce income from a different property. See Technical Bulletin #56 for the proper treatment of rental income and losses. Room and board payments made to you by member(s) of the household is rental income and must be reported on this line. Royalty income - Report income from Federal Form 1099-MISC, 1099-S, K-1 or Schedule E.

Line m HOUSEHOLD INCOME - Farm/partnership/S corporations/LLC/estate or Trust income

Federal Schedule K-1 pass-through income as required to be reported on Federal Form 1040, Schedules E and/or F. Report ordinary business income, rental income and guaranteed payments from K-1 on this line. The loss from one K-1 cannot offset income from another K-1. A loss is reported as zero. See Line L instructions for the only provision allowing netting of a business loss.

Line n HOUSEHOLD INCOME - other Income

Sources of other income include, but are not limited to, prizes and awards, gambling or lottery winnings, director's fees, employer allowances, taxable refunds from Federal Form 1040, allowances received by dependents of armed service personnel and military subsistence payments (BAH, FSA), loss of time insurance, cost of living adjustment paid to federal employees, and other gains from Federal Form 1040. Report on this line income reported to you by Federal Form 1099-MISC or W-2G. Cancellation of debt is no longer reportable as other income on the household income schedule.

Line p HOUSEHOLD INCOME ADJUSTMENT - Social Security and Medicare Tax Withheld and Self-Employment Tax on Income Reported

NOTE: The deduction is for taxes only. Medicare premiums withheld from Social Security payments are not an allowable adjustment.

You may deduct Social Security and Medicare taxes withheld from the wages included in household income. See W-2 box for Social Security tax withheld and Medicare tax withheld.
Social Security and Medicare payroll tax payments are deducted from household income, but only to the extent that the salary and wages are included in household income. For example, individuals with deferred compensation, military pay or allocated tips, the W-2 reported Social Security and Medicare payments are not correct for the calculation of household income on the HI-144.
(1) Deferred compensation - If you made a deferred compensation contribution for the tax year, the amount of the contribution is not included in the Federal adjusted gross income as stated in Box 1 on your W-2 form. The Social Security and Medicare taxes on the W-2 must be reduced for the purposes of reporting household income on the HI-144. Generally, this amount is 7.65% of the amount stated in Box 1 on the W-2 form.
(2) Military pay - Multiplying the amount stated in Box 1 on the W-2 by 7.65% provides the correct value for this deduction.
(3) Allocated tips - In addition to the figures included on the W-2, add the Social Security and Medicare payments you made as the result of completing Federal Form 4137.
Self-employed - Self-employed claimants may subtract from household income the amount from Federal Schedule SE, Section A, Line 5 or Section B, Line12 that represents the Social Security and Medicare taxes paid for 2022 for income reported on HI-144. For income not required to be reported upon which Social Security and Medicare taxes were paid, multiply the income not reported on HI-144 by 15.3% and subtract the result from the Federal Schedule SE amount. The amount of Social Security and Medicare taxes reported on this line includes the allowable deduction for one-half self-employment tax on Federal Form 1040 Line 27. You may be asked for a copy of your Federal Schedule SE.

Line q HOUSEHOLD INCOME ADJUSTMENTS - Child support paid

Report only those payments for which receipts or other evidence of payment is available. This evidence may include cancelled checks or a statement from the Office of Child Support in addition to the name and social security number of the parent receiving the payment.

Line r HOUSEHOLD INCOME ADJUSTMENTS - Allowable Adjustments from Federal Form 1040

The following expenses may be subtracted from income. They should be entered on Line r.

Certain business expenses of reservists - federal 1040, Schedule 1
Alimony paid - federal 1040, Schedule 1
Self-employed health insurance deduction - federal 1040, Schedule 1
Health savings account deduction - federal 1040, Schedule 1

Mailing Address:

Enter the address where you receive mail. This can be a P.O. Box.

Location of Homestead:

Enter the physical location of the homestead (street or road name). Examples: 123 Maple Street 276 Route 12A
Please do not enter post office box, "same", "see above", or town name here.

Vermont Homestead Declaration Form HS-122 Section A

The Homestead Declaration must be filed annually by every Vermont resident homeowner on their primary residence as of April 1 of the calendar year. If your homestead is leased to a tenant on April 1, you may still claim it as a homestead if it is not leased for more than 182 days in the 2022 calendar year.

Nonhomestead Property

Nonhomestead property is (1) property used for commercial purposes, or as a camp, second home or summer cottage, (2) property not declared as a homestead by the due date, (3) the portion of the home rented out, or (4) the portion of the home when more than 25% is used for business.

Property Tax Credit Claim

The property tax credit assists Vermont residents to pay property tax and is based on a percentage of household income. Homeowners eligible for a credit are those who (1) owned the property as a principal home on April 1; (2) were Vermont resident's all of calendar year 2022; (3) were not claimed as a dependent by another taxpayer for tax year 2022; and (4) household income is $134,800 or less in 2022. The credit is applied to your property tax and the town issues a bill for any balance due. The 2023 property tax credit is based on 2022 household income and 2022/2023 property taxes. To make a claim for property tax credit, file Form HS-122 and form HI-144, with the Vermont Department of Taxes.

When to File

File as early as possible. Form HS-122 can be filed separately from your income tax return. Timely filing is on or before APRIL 18, 2023. Late filings April 19th and after can still make a homestead declaration and property tax credit claim. Late filing penalties may be assesed by your town after April 18th.

No Extension of Time to File

An extension of time to file an income tax return does NOT apply to Form HS-122. Property tax credit claims are accepted only up to October 16, 2023.

Determining Household Income When You Have An Extension Of Time To File Your Income Tax Return

If you are not able to determine your household income, complete and file with Form HS-122 no later than October 16, 2023. You will want to make sure to estimate your household income high enough to avoid paying back your credit with penalties. If you are issued a property credit based on estimated household income, you will be responsible for paying back any excess payment that was sent to the town after amending.

Ownership Situations

Age 62 or Older in c If the Homeowner shares ownership of the housesite with his or her descendant(s), even if the other owners (descendants) are not members of the household, enter 100.00% ownership interest. A letter of explanation may be requested.
Divorced or Legally Separated Joint Owners If you are:
(1) divorced or legally separated from your spouse/civil union partner,
and
(2) the name of the spouse/civil union partner from whom you are divorced or legally separated remains on the deed,
and
(3) you are awarded possession of the home, you claim as ownership percentage the property taxes for which you are responsible under the final divorce decree or court order. If the divorce decree or court order does not specify responsibility for the property taxes, the person residing in the homestead uses 50% ownership interest. The person not living in the homestead cannot make a Property Tax Credit Claim. The Department may ask for a copy of the portions of the court documents showing the court, date filed, signature page, and the homestead related provisions.
Duplex Housing

BOTH OWNERS OCCUPY THE BUILDING AS THEIR PRINCIPAL RESIDENCE, the eligible housesite education property tax is the tax on the portion owned by each homeowner. If the town issues a property tax bill to each homeowner for his or her portion of the homestead, use the housesite value, housesite property tax and 100% ownership interest. If the property tax bill is for the total property, prorate the housesite value and housesite property tax.

BOTH OWNERS DO NOT OCCUPY THE DUPLEX AS THEIR PRINCIPAL RESIDENCE, the owner occupying the duplex as his or her principal residence must prorate for the other owner's interest.
Entity Ownership When an entity such as a C or S corporation, partnership or limited liability company owns the property, the property cannot be claimed as an individual's homestead. There is an exception for entity ownership of a farm. See Reg. 1.5401.
Life Estate A person who holds a life estate interest in a property that he or she occupies as a principal home must declare the property as a homestead. Check Box A8 of Form HS-122. A life estate is an interest in the property conveyed through a deed and recorded in the town records. The deed does not have to be attached to Form HS-122 but must be available for review upon Department request.
Property owned by dead spouse A homestead declaration can be filed if the property is owned by the estate of a dead spouse and it is reasonably likely that the dwelling will pass to the widow or widower by law or valid will when the estate is settled.
Shared Ownership of the Housesite When a housesite is owned by someone other than the Homeowner and member(s) of the household, the eligible property tax or housesite value is the percentage owned by the household members. Examples: (1) James, Grace and Lucinda jointly own a home and all live in the home. Lucinda is the Homeowner. She declares the property as her homestead. She enters the amount found on the property tax bill for the housesite value, the housesite property taxes and enters 100% ownership interest on as all owners live in the home; (2) Tim and Dan own a home. Tim lives in the home. Dan does not. Tim is the Homeowner. He declares the property as his homestead. He enters the amount found on the property tax bill for the housesite value, the housesite property tax and enters 50% ownership interest to adjust for ownership interest of Dan who does not live in the household.
Trust Ownership A dwelling owned by a trust is not the homestead of the beneficiary unless
The claimant is the sole beneficiary of the trust and:

1. The claimant or the claimant's spouse was the grantor of the trust, and the trust is revocable or became irrevocable solely by reason of the grantor's death;
or
2. The claimant is the parent, grandparent, child, grandchild or sibling of the grantor, the claimant is mentally disabled or severely physically disabled, and the grantor's modified adjusted gross income is included in the household income calculation.