SB674 • 2026

Income tax, state; first-time homebuyer tax credit.

<p class=ldtitle>A BILL to amend the Code of Virginia by adding in Article 3 of Chapter 3 of Title 58.1 a section numbered 58.1-339.15, relating to individual income tax; first-time homebuyer tax credit.</p>

Taxes

Enacted

This bill passed the Legislature and reached final enactment based on the latest official action.

Sponsor: Rouse
Last action: 2026-01-28
Official status: Continued
Effective date: Not listed

Plain English Breakdown

Checked against official source text during the last sync.

First-Time Homebuyer Tax Credit

This law creates a one-time, nonrefundable tax credit for first-time homebuyers purchasing residential property in Virginia, allowing them to reduce their state income taxes by up to $10,000.

What This Bill Does

Creates a one-time, nonrefundable individual income tax credit for expenses incurred by first-time homebuyers for the purchase of direct ownership in residential real property.
Limits the credit amount to five percent of the purchase price or up to $10,000 per transaction.
Requires repayment if the property is sold within three years unless due to natural disaster.
Allocates credits on a first-come, first-served basis with an annual cap of $10 million.
Allows unused credit amounts to be carried over for up to five additional tax years.

Who It Names or Affects

First-time homebuyers purchasing residential real estate in Virginia.
The Department of Taxation and the Tax Commissioner who will manage the program.

Terms To Know

First-time homebuyer: An individual or married couple with no ownership interest in a principal residence during the three years before purchasing their new property, and an annual household income that does not exceed $100,000 or the median annual household income for the locality.
Nonrefundable credit: A tax benefit that can only reduce your tax liability to zero but cannot result in a refund.

Limits and Unknowns

The law does not specify the exact process for claiming the credit or repaying it if required.
It is unclear how the Tax Commissioner will develop and implement guidelines for this program.

Bill History

2026-01-28 Finance and Appropriations
Continued to 2027 in Finance and Appropriations (12-Y 2-N)
2026-01-26 Senate
Fiscal Impact statement From TAX (1/26/2026 10:16 am)
2026-01-14 Senate
Prefiled and ordered printed; Offered 01-14-2026 26100702D
2026-01-14 Finance and Appropriations
Referred to Committee on Finance and Appropriations

Official Summary Text

Individual income tax; first-time homebuyer tax credit.
Creates a one-time, nonrefundable individual income tax credit in taxable years 2026 through 2030 for expenses incurred by a first-time homebuyer for the purchase of direct ownership in residential real property in an amount equal to five percent of the purchase price value of such property detailed on the purchase agreement up to $10,000. The bill requires that any credits be repaid in the event that the residential real property for which first-time homebuyer expenses were incurred and such credit was claimed is sold within three years from the purchase date of such property.

Current Bill Text

Read the full stored bill text

A BILL to amend the Code of Virginia by adding in Article 3 of Chapter 3 of Title 58.1 a section numbered
58.1-339.15
, relating to individual income tax; first-time homebuyer tax credit.

Be it enacted by the General Assembly of Virginia:

1. That the Code of Virginia is amended by adding in Article 3 of Chapter 3 of Title 58.1 a section numbered
58.1-339.15
as follows:

§
58.1-339.15
.
F
irst-time homebuyer tax credit.

A. As used in this section
:

"First-time homebuyer" means
an individual
or married individuals filing jointly

(i) who
ha
ve
had no ownership
interest
in a principal residence during the
preceding

three
-year period ending on the date of purchase of
the residential

real
property
detailed on the purchase agreement

and (ii)
who ha
ve
an annual household income
in the
most recent
taxable year
that does not exceed
the greater of (a)
$100,000
or (b)
the
median
annual household income
for the locality in which such residential real property is situated according
to
the most recent data available from the U.S
.
Census Bureau
.

"F
irst-time homebuyer

expenses
" means
costs

incurred
by a first-time homebuyer

in
the
purchase
of
direct ownership
in
residential real property

in an amount equal to the
purchase
price
value
of such property
detailed
on the purchase agreement
.

B
.

For taxable years beginning on and after January 1,
2026
, but before January 1,
2031
,
a first-time homebuyer shall be allowed a
one-time
nonrefundable credit
against the tax levied pursuant to §
58.1-320
in an amount
equal to

five
percent of
first-time homebuyer
expenses
incurred
during the taxable year
,
not to exceed $10,000.
The aggregate amount of credits allowable under this section shall not exceed $10 million per taxable year. Credits shall be allocated by the Department on a first-come, first-served basis.

C. The amount of the credit that may be claimed in any single taxable year shall not exceed the taxpayer's liability for taxes imposed by this chapter for that taxable year. If the amount of the credit allowed under this section exceeds the taxpayer's tax liability for the taxable year in which the
first-time homebuyer expenses were incurred
, the amount that exceeds the tax liability may be carried over for credit against the income taxes of the taxpayer in the next
five
taxable years or until the total amount of the tax credit has been taken, whichever is sooner.

D.
Any credit
amount
claimed pursuant to this section shall be repaid to
the Commonwealth in the event that the residential real property for which first-time

homebuyer expenses were incurred

and such credit was claimed
is sold within three years from the
purchase date
of such property
.
Repayment pursuant to this subsection shall not be required if such sale was made following a natural disaster or other act of
G
od
that made such residential real property
uninhabitable
.

E
. The Tax Commissioner shall develop guidelines for claiming the credit
and for any repayment requirements
provided by this section. Such guidelines shall be exempt from the provisions of the Administrative Process Act (§
2.2-4000
et seq.).