House advances bill to streamline treatment and taxation of manufactured homes after extended debate

The House on March 17 amended and advanced H757, a bill that rewrites how Vermont treats manufactured homes and limited-equity cooperatives (LECs), aiming to reduce transaction costs and remove zoning and tax barriers that advocates say impede affordable homeownership.

The measure clarifies that manufactured, modular and prefabricated homes ‘‘must be treated the same as site-built homes for land-use purposes,’’ and preserves two paths for transferring a manufactured home — by deed (real property) or by bill of sale (personal property). The member presenting the bill said the deed option ‘‘provides greater protection to the buyer’’ while keeping the bill-of-sale option available to preserve flexibility.

Committee report language adopted on the floor adjusted the bill’s tax approach. Under the Ways and Means committee amendment, manufactured homes financed with deeds will be subject to the property transfer tax and exempt from sales and use tax; homes sold by bill of sale will remain subject to sales and use tax, but the sales-tax exemption level was expanded to bring parity between the two approaches. A floor explanation noted the change is expected to reduce sales-tax revenue by about $200,000 in FY27 and $500,000 annually thereafter, and the effective date for tax changes was moved to Jan. 1, 2027 to give the Tax Department time to implement the new rules.

Supporters described manufactured housing as a key affordable option for working families, older adults and people on fixed incomes. ‘‘Manufactured homes are now manufactured to a robust standard building code promulgated by the Federal Department of Housing and Urban Development known as the HUD code,’’ the member who introduced the concept told the chamber, arguing the bill removes outdated barriers to financing and placement. Committee members also noted provisions intended to protect affordability in LECs, including limits on subleasing and rules to preserve nonprofit cooperative status.

Opponents and questioners pressed for clarity on property tax assessment consistency for cooperatives; the bill directs the Department of Taxes to inventory current valuation practices for LECs and to recommend a preferred statewide approach by Nov. 15, 2026. The House adopted the committee amendment and ordered third reading.

What happens next: The bill was amended on the floor and ordered to third reading; tax-implementation details will be phased in to allow administrative preparation and a Department of Taxes inventory is required to address valuation inconsistencies.