Bill > HB1258

This bill establishes a new tax credit for owners of "qualified rental property" – which is defined as residential rental property that has been rented for at least 24 consecutive months, has no uncorrected building code violations, and is not already receiving certain other tax benefits for affordable housing – for taxable years 2026 through 2030. The credit is intended to help offset increases in real property taxes that exceed a certain limit, referred to as a "qualifying tax increase." To be eligible, property owners must certify that they are limiting rent increases on renewal leases to no more than the annual percentage increase in the Consumer Price Index (CPI) for the South, and that all property-related taxes and fees are current. The Department of Taxation will administer the credit, requiring an application process that includes proof of rent limitations and tax payments. The Department will audit at least five percent of properties claiming the credit, and if an owner is found to have falsely certified compliance, they will have to repay the credit and will be barred from claiming it for five years; knowingly making a false statement on an application is a Class 3 misdemeanor. The bill also specifies that the credit is only available for properties with 10 or more units for qualifying tax increases in 2026, then three or more units in 2027, and all qualified properties thereafter. The total amount of credits allowed annually is capped at $5 million and allocated on a first-come, first-served basis, with any unused credit able to be carried over for up to five years. Finally, the Department of Taxation is required to report annually on the credit's utilization to legislative committees.

Budget and Finance

https://lis.virginia.gov/bill-details/20261/HB1258