Vermont Title Loophole Facts: Tax & Residency

Today we’re going to talk about the very popular Vermont registration title process that many people use in all parts of the country to get valid ownership documents for their vehicle. A lot of questions come up about this. Do you have to be a resident of Vermont? What paperwork do you need? What about taxes? These are very common questions, and we’re going to look at all those and we’re going to get the information directly from the Vermont DMV.

Getting Information from Vermont DMV
So, we’re going to get it from the horse’s mouth like they say. We’re not going to use any kind of urban legends or old wives’ tales or anything that you might hear online. We’re going to get it right from the Vermont DMV. First, we’re going to look at the FAQ page on the official Vermont Government website.

FAQ Page on Vermont Government Website
FAQs:
Can someone else fill out the registration form for me? Yes, someone else can complete it but you have to sign it. Application must be signed by the owners of the applicant, that’s you.
How long do I have to get inspected? Well, inspection is only for newer vehicles, so it doesn’t really count as far as older vehicles.
Do I have to be a Vermont registered resident to register a vehicle in Vermont? No, anyone can register a vehicle in Vermont. That’s key.
Do I need a Vermont license to register? No, anyone can register a vehicle. Notice the answer is the same. So don’t let anybody tell you otherwise. As of right now, you can register as a non-resident.

Required Documents
Now, what paperwork are you going to need? Well, we’re going to use their required document wizard. What do you need to have? It also tells you completing your forms prior to coming to the DMV makes it easier. Now, if you’re from another state, you’re not going to go to DMV, you’re going to do it by mail.

Types of Vehicles and Eligibility
First, it’s going to tell you what type of vehicle do you have? Auto, Truck, motorcycle. So we’re going to put in Auto. The answers are going to be pretty much the same. Next is most important question is your auto 15 years or newer? 15 years or newer? This Vermont process is for vehicles that are 15 years or older. So if you have right now a 2008 model or older, that’s what’s designed to be used for this process. So remember, 15 years and older is what this process is for. So this question asks you is your vehicle 15 years or newer?

Required Documentation
No, what do you need? Well, there’s no other questions, required documentation. Please complete the forms, VD119, VT005, fill in these sections, and either bring or mail the form to the Department of Motor Vehicles. That’s it, end of story. There are no more questions, no more questionnaires, right? So it’s very simple, you have to fill out the forms properly because we talked to Vermont DMV very frequently, and they tell us all the time that there are common errors people make on these forms. So make sure you fill it in right, but that’s all you need, required documentation, complete the forms.

Bill of Sale and Required Fees
Now, one of those sections is about a bill of sale. You need to have a bill of sale for this, so make sure you do that.

Taxes and Fees
Required fees:
What fees will be due, taxes is what people ask about. How much tax do I have to pay? Well, let’s see what Vermont says about that. Here’s their page on taxes, official government website. Purchase and use tax is due at the time of registration. It’s a percentage of the purchase price or NADA clean trading value, whichever is greater, minus the value of a trade-in, which normally doesn’t apply because you’re not buying it from a dealer, you’re not trading in a vehicle. So, this is where people kind of get a little bit anxious.

Tax Rates and Options
Well, NADA, it seems like it’s too much money. Well, maybe it is, maybe it’s not. However, you have a few options. It says NADA clean Book value is due and less exempt. We have a couple options. First of all, their website says NADA clean trade and Book value. However, the Vermont statutes, the actual laws on the books, tell you that you can use some other value guides if they’re accepted on some older vehicles, on some trucks, on some alternate vehicles. You can use other guides. Now, NADA still might be less, but you can look at the other guides if you believe the vehicle’s value is less than NADA value, you can submit an appraisal form. Well, that’s one of the things that we prepare a lot for our clients, is this appraisal form because they want to come in with a lower value. So be aware, you can do that.

Tax Credits and Special Vehicles
Then you have some other options. If you are claiming a tax credit for a vehicle registered to you out of state, send a copy of the registration certificate. This normally doesn’t apply, but you may have already paid some taxes for this vehicle that you get a credit for. And here’s your tax rates. Tax rate basically is 6 percent across the board, except for short-term vehicle rental, which is 9 percent, but everything, ATV, auto, boat, motorcycle, motorhome, trucks, 10,000 pounds in over or under, all other vehicles, everything is 6 percent.

Special Vehicles and Maximum Tax
Now, there’s a couple things from this table which are very, very helpful. First of all, on some larger vehicles, 10,000 pounds or more, or other vehicles which are, you know, kind of specialty vehicles, there’s a maximum tax of $2,000. So you might max out your taxes.

Conclusion and Additional Information
Also, it tells you what type of vehicles you can register. People ask all the time, can I do an ATV? Yep, it’s right here on the classification. Motorboat? Yep, you can do that too. Now, you notice it says motorboat, it’s not kayak, canoe, gotta have a motor. Motorcycles? Yep. Motorhomes? Yep. Trucks, doesn’t matter if it’s above 10,000 pounds, 10,100 actually, you can register it. The taxes where people get tripped up, you may believe that your vehicle is not worth that much and you don’t want to pay that much tax. You have two options. You can fill out the Vermont appraisal form or you can look at another title method that’s not through Vermont that maybe doesn’t have tax. So if you want to use the Vermont method, you have to pay them their tax. Their law says you have to use book value. If you don’t think you feel like you want to pay book value, that’s fine. Look at another method. Maybe buy the title, maybe lean title, maybe magistrate title. There’s other methods. You’ll see them on our website that maybe don’t have taxes, but they may have something else you don’t like or use the Vermont appraisal form, which we provide when we do the order. Vermont can make it their determination. Maybe your vehicle is worth less than the book value.

Additional Instructions and Limitations
So that’s an overview of the Vermont process as of December 2022. We’re doing this in advance of 2023. Remember that there’s other instructions you need to follow. You need to have a bill of sale. You need to have a proper vehicle. You can’t have one that’s salvage or parts only or junk or things like that. You have to have a legitimate vehicle. And there’s other limitations we’re going to talk about in another video about military vehicles, these former military surplus vehicles that are now something that could be a problem for some applicants. Hopefully, that helps. Check out our website, we’re glad to be of assistance.

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