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Taxes and Homeownership: Consult a Professional 

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Taxes and mortgages are two complex yet interlinked facets of personal finance that significantly impact homeownership. Understanding their relationship is important for anyone who is considering the purchase of a home or already navigating the waters of homeownership. In this post, we’ll delve into the intricate connection between taxes and mortgages, shedding light on how they influence each other and offering insight to help you navigate this aspect of personal finance. 

Remember, the information provided here is for general guidance and informational purposes only. For personalized advice regarding taxes, mortgages, or any financial matters, consult directly with qualified professionals. 



For many individuals, buying a home represents the most significant financial investment of their lives. Besides the upfront costs, homeowners also face ongoing financial responsibilities, including home maintenance and property taxes.  

Property tax rates vary across municipalities in Vermont and are based on the assessed value of the property. These taxes play a vital role in funding public services such as schools, infrastructure, and emergency services within the community. 

Many buyers here in Vermont are unaware that there is a property tax adjustment program aimed at assisting eligible homeowners with their property tax burden. This program, often referred to as the Homestead Declaration and Property Tax Adjustment Claim, or VT form HS-122, is a state of Vermont program that allows you to apply for a reduction to your property tax bill. It considers household income and property value to calculate the property tax adjustment. Many people mistakenly overlook this and do not file the required forms for this property tax adjustment.  

Currently, there are two forms that need to be filed along with your Vermont state tax return: Form HS-122 and the household income Schedule HI-144. As this is an income-based adjustment, not everyone will qualify. That said, everyone should file these forms, even if you do not qualify. If not filed, your property can be classified as non-residential, therefore taxing your property at a higher percentage with the town.  

It is important to file the Homestead Declaration forms each year with your income tax return. The Property Tax Adjustment can change every year depending on your income and your eligibility. 

If you just purchased your home, it’s important to remember the property tax credit reflected on the current years’ property tax bill is likely based on the seller’s Homestead Declaration filed with their income tax return. The amount shown does not carry forward into future fiscal years with the property.  


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There are a few items related to owning a home that can be deducted if your expenses are above the standard deduction. Those items are mortgage interest, discount points, and property taxes. A few years ago, the standard deduction increased significantly, so many do not have an itemized amount that is greater than the standard deduction. In addition to homeownership, there are other considerations with the decision to itemize deductions: medical expenses, contributions to charity, income tax, and sales tax paid. You will want to be sure to keep receipts during the year if you do decide to itemize.  



Another great tax advantage is being offered to homeowners who are making improvements to their homes: energy efficiency credits. As a homeowner, you may decide to do some upgrading in the future. Before making big improvements, check with the state on what the credits are. Many items are very specific. Visit the Database of State Incentives for Renewables & Efficiency (DSIRE) website, a database run by N.C. State University, for more information on incentives specific to Vermont or any other state. 



Taxes and mortgages are intricately linked, exerting a profound influence on homeownership and personal finance. Understanding the dynamics between taxes and mortgages empowers individuals to make informed decisions regarding buying, owning, or refinancing a home.  

Ultimately, a well-informed approach to taxes and mortgages ensures a more secure path toward successful homeownership.  


Thanks to Jennifer Partch of JPW Accounting Services for her contributions to this blog. She has been in business for 27 years and enjoys helping clients with bookkeeping and tax preparation.

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Casandra Ellison

About Cassy Ellison

Cassy joined NEFCU’s mortgage team in 2020 and has enjoyed helping members meet their personal financial goals as well as homeownership.  Cassy is a native Vermonter with a bachelor’s and master’s degree from the University of New Haven.  In her spare time, she is an amateur strongman competitor, so when she’s not helping members, you can find her in the gym.

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