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Land Gains Tax 
This is a tax paid by the seller on land which has been held for six, or less, years. It was enacted to regulate short term speculation in land sales by taxing the profits of the sale. The land gains tax is in addition to any federal, state, or local income tax which might be due on the sale of property. In other words, this tax is different than, and in addition to, federal and state capital gains taxes.
In general, anyone who sells land in Vermont which was owned by the seller for less than six years is required to file a Land Gains Tax Return (Form LG-2) with the Vermont Department of Taxes even if no tax is due. Anyone who buys land in Vermont from a seller who has not held the land for six years is required to file a Land Gains Withholding Tax Return (Form LG-1) with the Vermont Department of Taxes.
Tax is not paid on property of less than 10 acres if seller or buyer is using it as their primary residence. If the property will have a house built on it, which will be used as a primary home within 2 years, then the tax does not have to be paid. Once the buyer certifies that they are using the property as a primary residence, or will be building a primary residence within 2 years, the responsibility for paying the tax switches to them.
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Land Gains Tax Rates
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Years Land Held
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Percent Gain
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0-99%
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100-199%
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200% or More
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Less then 4 months
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60%
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70%
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80%
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4 months but less than 8
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35%
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52.5%
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70%
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8 months but less than 1 year
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30%
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45%
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60%
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More than 1 year but less than 2
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25%
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37.5%
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50%
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More than 2 years but less than 3
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20%
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30%
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40%
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More than 3 years but less than 4
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15%
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22.5%
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30%
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More than 4 years but less than 5
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10%
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15%
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20%
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More than 5 years but less than 6
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5%
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7.5%
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10%
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