Real property tax; classification of land and improvements.

Plain English Breakdown

The requirement for public notice is mentioned in the official text but was removed from the candidate explanation as it does not align with the provided summary and digest.

Real Property Tax Changes for Land and Improvements

This bill changes how real property taxes are calculated by allowing localities to tax improvements (like buildings) at a different rate than the land they sit on.

What This Bill Does

• Changes the law so that any locality can treat improvements to real property as a separate class for taxation purposes.
• Allows localities to set a different tax rate for improvements compared to the land, which could be higher, lower, or equal.
• Removes restrictions previously limiting this practice only to certain cities like Fairfax, Poquoson, Richmond, and Roanoke.

Who It Names or Affects

• Local governments in Virginia that want to change how they tax real property.
• Property owners whose taxes might be affected by changes in the way improvements are taxed.

Terms To Know

Improvements

Buildings, structures, and other additions made to land that increase its value or usability.

Locality

A city or town within Virginia with the authority to set local laws and taxes.

Limits and Unknowns

• The changes only apply to taxable years starting on July 1, 2026, or later.
• It does not specify how much tax rates can differ between land and improvements.

Official Summary Text

Real property tax; classification of land and improvements.
Reclassifies improvements to real property as a separate class of real property and authorizes any locality to impose a real property tax on improvements to real property at a tax rate that is different than the rate applied to the land on which such improvements are located. Such rate may exceed, equal, or be less than the tax imposed upon the land on which the improvements are located.

Under current law, such classification is allowed only for the Cities of Fairfax, Poquoson, Richmond, and Roanoke. For the Cities of Fairfax, Richmond, and Roanoke, the rate applied shall not exceed the rate applied to land under current law. The City of Poquoson is currently the only locality authorized to impose a rate in excess of the rate applied to land. The bill applies only to taxable years beginning on and after July 1, 2026.

Current Bill Text

A BILL to amend and reenact §
58.1-3221.1
of the Code of Virginia, relating to real property tax; classification of land and improvements.

Be it enacted by the General Assembly of Virginia:

1. That §
58.1-3221.1
of the Code of Virginia is amended and reenacted as follows:

§
58.1-3221.1
. Classification of land and improvements for tax purposes.

A. In
the Cities of Fairfax, Poquoson, Richmond, and Roanoke
all localities
, improvements to real property are declared to be a separate class of property and shall constitute a separate classification for local taxation of real property.

B. The governing body of
the City of Fairfax, the City of Richmond, and the City of Roanoke
any locality
, after giving public notice and an opportunity for the public to be heard in the manner provided in §
58.1-3007
, may levy a tax on the property enumerated in subsection A at a different rate than the tax imposed upon the land on which it is located, provided that the rate of tax on the property described in subsection A shall not be zero
and shall not exceed the rate of tax on the land on which it is located
.

C. Nothing in this section shall be construed to permit
the
City of Fairfax, Poquoson, Richmond, or Roanoke
a locality
to alter in any way its valuation of real property covered by this section.

D. The governing body of the City of Poquoson, after giving public notice and an opportunity for the public to be heard in the manner provided in §
58.1-3007
, may levy a tax on the property enumerated in subsection A at a different rate than the tax imposed upon the land on which it is located, provided that the rate of tax on the property described in subsection A shall not be zero.

2. That the provisions of this act shall apply only to taxable years beginning on and after July 1, 2026.