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BEWARE: STATUTORY CHANGE MAY RESULT IN UNFAIR TAX PRORATIONS

Realtors, Buyers and Sellers negotiating a purchase and sale agreement should be aware that a new statute 27 VSA 309(a) changes the way tax prorations have traditionally been done. In towns, where the tax fiscal period is other than July 1 - June 30, the Seller bears the burden for real estate taxes allocable to school taxes for the period of July 1 of that fiscal year and ending on the day of closing. The buyer bears the burden of real estate taxes allocable to school taxes for the period beginning with the date of closing and ending with the last day of the respective fiscal year. This statute creates ambiguities with respect to prorating taxes in these towns. To avoid confusion, we recommend addressing this in the contract negotiation. For example, an addendum should be added to paragraph 26 of the Vermont Association of Realtors contract (1999 version) stating that all property taxes, including statewide and municipal educational property taxes shall be prorated in accordance with the municipality's fiscal period (town's tax year). For more information click here

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