VirginiaSB1812026 Regular SessionSenateWALLET

Real property tax; partial exemption for repurposing underutilized structures for residential use.

Sponsored By: Angelia Williams Graves (Democratic)

Became Law

Summary

Real property tax; partial exemption for repurposing underutilized structures for residential use; local incentives. Permits localities to provide partial real estate taxation exemptions for converted real property where such conversion establishes a residential structure that has set aside at least 30 percent of the structure for households with a per capita income at or below 80 percent of the locality's median income or where the building owner is subject to an agreement with the Commonwealth or the locality regarding the provision of affordable housing. Localities have discretion to determine (i) whether a converted building qualifies for the partial exemption, (ii) any additional restrictions and conditions, (iii) whether the exemption is the amount equal to the increase in assessed value or a percentage of such increase resulting from the repurposing of the structure, and (iv) the length of time the exemption will run with the land, not to exceed 15 years. The bill provides that, at any time a building for which its owner claims a partial exemption no longer meets the requirements to receive such exemption, the locality may recapture all or a portion of the exemption granted in the immediately preceding year. Further, if a building owner that claims an exemption as described by the bill sells the building for which he is claiming the exemption and, after the sale, the property no longer meets the requirements described by the bill, the purchaser shall be subject to a penalty. The building owner shall provide written notification of the partial exemption to the purchaser. The bill also permits localities to grant tax incentives or provide regulatory flexibility to qualifying converted real property.

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Bill Overview

Analyzed Economic Effects

3 provisions identified: 1 benefits, 0 costs, 2 mixed.

Property tax break for fixing older homes

The law lets counties, cities, and towns offer a partial property tax break when you rehab, renovate, or replace a home that is at least 15 years old. You must get permits, finish the work, and have the local assessor verify it. The break can equal the value increase, a set percent of it, or up to 50% of rehab costs. It can start at completion or the next January 1 and last up to 15 years; the exempt amount runs with the land. You get a written notice showing the exempt value and term; the exemption cannot erase the structure’s full value. Application fees are capped at $125 for homes and $250 for larger buildings. No break applies if a registered landmark or a contributing historic building was demolished and replaced.

Tax break to convert empty buildings

Localities can give a partial property tax break for turning older retail, commercial, or religious buildings into homes. The building must be at least 15 years old, allow depreciation, and have certified costs above the greater of its adjusted basis or $15,000, not counting purchase or enlargement. At completion, either at least 30% of units must be offered to households at or below 80% of the locality’s median per‑capita income, or you must have a recorded affordable housing agreement. The break can be based on the value increase or a set percent of it, but it cannot exceed eligible conversion expenses, and can last up to 15 years. If you later fall short of the 30% affordable‑unit target, the locality may take back part of the prior year’s exemption in proportion to how far you missed the benchmark. If the property is sold and later fails to meet the rules, the buyer owes the difference between taxes paid and fair‑market‑value taxes for the prior five years, plus simple interest; the seller must give written notice before the sale.

Local fee cuts and faster permits

Localities may set up programs to encourage these conversions. They can lower permit fees, speed up approvals, or cut local gross receipts taxes tied to conversion costs. Incentives exclude purchase and enlargement costs and may scale with population density.

Sponsors & Cosponsors

Sponsor

  • Angelia Williams Graves

    Democratic • Senate

Cosponsors

There are no cosponsors for this bill.

Roll Call Votes

All Roll Calls

Yes: 299 • No: 101

House vote 4/22/2026

House concurred in Governor's recommendation

Yes: 65 • No: 31

Senate vote 4/22/2026

Senate concurred in Governor's recommendation

Yes: 21 • No: 18

Senate vote 3/4/2026

House substitute agreed to by Senate

Yes: 21 • No: 19

House vote 3/2/2026

Passed House with substitute

Yes: 70 • No: 29

House vote 2/25/2026

Reported from Finance with substitute

Yes: 17 • No: 4

House vote 2/24/2026

Subcommittee recommends reporting with substitute

Yes: 11 • No: 0

Senate vote 2/2/2026

Read third time and passed Senate Block Vote

Yes: 40 • No: 0

Senate vote 1/30/2026

Engrossed by Senate Block Vote (Voice Vote)

Yes: 0 • No: 0

Senate vote 1/29/2026

Passed by for the day Block Vote (Voice Vote)

Yes: 0 • No: 0

Senate vote 1/29/2026

Constitutional reading dispensed Block Vote (on 1st reading)

Yes: 40 • No: 0

Senate vote 1/28/2026

Reported from Finance and Appropriations

Yes: 14 • No: 0

Actions Timeline

  1. House concurred in Governor's recommendation (65-Y 31-N 0-A)

    4/22/2026House
  2. Senate concurred in Governor's recommendation (21-Y 18-N 0-A)

    4/22/2026Senate
  3. Acts of Assembly Chapter text (CHAP0994)

    4/22/2026Governor
  4. Reenrolled bill text (SB181ER2)

    4/22/2026Senate
  5. Reenrolled

    4/22/2026Senate
  6. Approved by Governor-Chapter 994 (effective 7/1/2026)

    4/22/2026Governor
  7. Signed by President

    4/22/2026Senate
  8. Signed by Speaker

    4/22/2026House
  9. Governor's recommendation adopted

    4/22/2026Governor
  10. Governor's recommendation received by Senate

    4/12/2026Governor
  11. Fiscal Impact statement From TAX (3/20/2026 11:42 am)

    3/20/2026Senate
  12. Governor's Action Deadline 11:59 p.m., April 13, 2026

    3/14/2026Governor
  13. Enrolled Bill communicated to Governor on March 14, 2026

    3/14/2026Senate
  14. Bill text as passed Senate and House (SB181ER)

    3/10/2026Senate
  15. Enrolled

    3/10/2026Senate
  16. Signed by President

    3/10/2026Senate
  17. Signed by Speaker

    3/10/2026House
  18. House substitute agreed to by Senate (21-Y 19-N 0-A)

    3/4/2026Senate
  19. Passed House with substitute (70-Y 29-N 0-A)

    3/2/2026House
  20. Engrossed by House - committee substitute

    3/2/2026House
  21. committee substitute agreed to

    3/2/2026House
  22. Read third time

    3/2/2026House
  23. Read second time

    2/27/2026House
  24. Committee substitute printed 26108536D-H1

    2/26/2026House
  25. Reported from Finance with substitute (17-Y 4-N)

    2/25/2026House

Bill Text

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