Pros and Cons of Buying Land in Vermont

Vermont's picturesque landscapes and rural charm make it an attractive option for land buyers, but purchasing property in the Green Mountain State comes with both advantages and challenges. According to the U.S. Census Bureau, Vermont's total land area is approximately 9,249 square miles, with only 1.3% of that land classified as urban. This leaves a significant portion of the state as potential rural or undeveloped land for purchase. The Vermont Department of Taxes reports that the average per-acre value of land in the state was $3,700 in 2022, though prices can vary widely depending on location and features. Additionally, a study by the Vermont Natural Resources Council found that forest fragmentation has been increasing, with an average of 1,500 acres of forest converted to other uses annually between 2004 and 2016, potentially impacting land availability and conservation efforts.

The Pros of Buying Land in Vermont

Peaceful Lifestyle

Vermont is an ideal place for those looking to live surrounded by nature. With over 75% of the state forested, there is an abundance of scenic beauty. Outdoor recreational opportunities also abound with skiing, hiking, fishing, hunting and more through the Green Mountains and beyond.

The pace of life tends to be more relaxed here. Many value the quieter lifestyle Vermont offers away from big city hustle and bustle. Violent crime rates remain super low as well.

Low Taxes

Vermont has relatively low property taxes compared to other Northeastern states. Effective property tax rates average around 2% statewide. Some towns even have rates below 1%.

There is no general sales tax on most items besides prepared foods and rental cars. And inheritance/estate taxes exempt the first $5 million passed onto heirs.

Overall, the tax burden ranks as one of the most favorable in the U.S. This makes it appealing for property owners and land buyers.

Investment Opportunities

Despite already rapid growth, many areas still have room for further development. Investors can capitalize on hot real estate markets near popular ski resorts. Or they may bet on more rural locales attracting future residents as remote work trends continue post-pandemic.

Those looking for more immediate returns could lease out land for maple sugar production, logging, mineral extraction or cell tower installation rights. Savvy landowners generate lease income from allowing recreational uses like hunting, fishing and camping as well.

And if purchased at a discount, larger acreage could eventually be subdivided into smaller parcels for resale at higher per acre prices.

Incentives for Conservation

For environmentally-minded buyers, there are ways to conserve undeveloped land while still owning it. Vermont has one of the oldest current use taxation programs which offers significant property tax cuts for leaving land undeveloped.

Land trusts also frequently offer conservation easements to protect natural or agricultural land uses while compensating landowners. And federal tax deductions up to $500,000 can apply on eased land no longer available for development.

Affordable Options

Despite hot real estate markets closer to amenities, affordable land can still be found in Vermont’s more rural areas. The northeastern section offers some of the most reasonable prices for those looking for seclusion and scenery over convenience.

With some effort, negotiating and creativity, buying land even near pricier resort towns may still be possible too. Having a flexible timeline helps as well since pocket listings sometimes come on the market.

The Cons of Buying Land in Vermont

Short Construction Season

Vermont’s long winters limit outdoor construction and development projects in many parts of the state to just a few months a year. The ground needs to thaw and dry out before digging can commence. Quick spring thaw mud seasons also hamper work.

Most site work can only happen between late May through October before deep frost and snow returns. Cold climate building techniques like frost protected shallow foundations add expense as well.

Development Constraints

Vermont prioritizes environmental conservation and sustainable development practices. But buyers should understand various zoning regulations, septic/sewer requirements, conservation easement complexities, shoreland ordinances and more based on location.

There may be constraints on density, minimum lot sizes, setbacks from roads/water and allowable land uses. Some towns mandate design standards for maintaining rural character too.

It helps to consult with lawyers, contractors and officials to grasp what is buildable or allowed activity-wise on a property before purchasing. Surprises could be costly after the fact.

Limited Inventory

The number of homes and land for sale continues dropping while competition rises. Many aging owners are reluctant sellers. And contractor shortages constrain new construction.

High demand neighborhoods near ski resorts and cities get snapped up lightning fast, frequently via cash offers or bidding wars. More rural locations move quickly too albeit slightly less fiercely than red hot markets.

Patience and acting decisively are key when inventory appear. Working with an experienced agent helps navigate fast-paced deal making as well.

Tax Hurdles for Non-Residents

Vermont levies a non-resident tax of 0.5% on the first $200,000 of property value and 1.25% above that. So, an out-of-stater would pay $2,750 annually in taxes on a $500,000 second home for instance. Plus, some towns tack on another 1% for non-primary residents.

Short term rentals also incur hotel and rooms taxes. And sellers must withhold 2.5% of sale proceeds for the state income tax if the property was not a primary residence.

Infrastructure Gaps

While internet access improves statewide, rural areas still suffer from spotty broadband connectivity making remote work tricky. Cell service can drop out in the mountains as well. And winters strain road maintenance budgets leading to bumpier rides in some locales.

Home solar and backup generators help cope with occasional long power outages from weather events too. Living far from hospitals and stores requires self-sufficiency when storms hit. So closer proximity to town centers balances out rural seclusion for some.

Hidden Costs

Landowners pay directly for road plowing and maintenance in many rural locales without municipal services. Trash removal and security system monitoring also come out of pocket in more remote areas.

Heating bills run high during cold months, even with efficient stoves and weatherization. And costs to improve long windy driveways or extend utility lines subtract from budget expectations fast. It is wise to pad estimates for true expenses.

Final Thoughts on Buying Land in Vermont

Vermont offers gorgeous scenery and a peaceful lifestyle for land buyers willing to pay area premiums. However, land development contains challenges as well from regulations and taxes to remote location considerations.

Doing in-depth research beforehand and accounting for all potential costs helps set realistic expectations. Finding trusted local partners including agents, lawyers and contractors proves invaluable too. They assist navigating nuances so the buying process goes more smoothly.

With eyes wide open to both favorable factors and diligence required in the Green Mountain State, many discover their perfect parcel or property to call home. The state's natural wonders and slower way of living merit deeper investigation from those intrigued.

Frequently Asked Questions (FAQs)

What permits do I need to build on land in Vermont? 

Whether building a home, accessory structure or installing a septic system, you’ll likely need zoning permits, wastewater permits and potentially Act 250 Land Use permits depending on the scope of development plans. Research with the local zoning administrator before buying land.

Can I buy raw land and camp on it while building my house in Vermont? 

Yes, once you purchase vacant land, you can legally camp up to two weeks on your own property without needing any state permit. The two weeks of free camping resets every 6 months too.

How do property and land taxes work in Vermont for out-of-state buyers? 

Non-residents face a Vermont Land Gains Tax of 15% when reselling land or a property under six years of ownership, because it’s classed as business income. You can avoid this tax as a primary resident however. And principal residences see tax deductions on the first $125,000 of value.

How do I find discounted land for sale in Vermont? 

The usual real estate portals like Zillow, Redfin and Realtor.com list property listings. But identifying pocket listings by networking with local agents, lawyers and contractors in your preferred area also helps uncover deals before hitting the wider MLS. Some sellers accept cash offers at discounts too. Being flexible on geographic region and open to less desirable acreage helps as well.

Can I finance raw land purchases with a mortgage in Vermont? 

Yes, though not all traditional banks do raw vacant land loans. Farm Credit and local credit unions sometimes offer financing for partial acreage - usually up to 10 acres if buying for personal use. Larger tracts as a speculative investment typically require meeting cash down payment requirements however. So, research lender minimums at the property location's price point before attempting to buy.

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