Can you please provide a breakdown of the $3.3 million of real estate tax relief programs currently provided by the City?

FY 2017 Budget Question: Can you please provide a breakdown of the $3.3 million of real estate tax relief programs currently provided by the City?

Page updated on Jun 16, 2017 at 11:02 AM

The City provides three real estate tax relief programs, the Real Estate Tax Relief for Elderly and/or Totally Disabled Persons, Real Estate Tax Relief for Disabled Veterans, and Real Estate Tax Relief for Surviving Spouses of a Member of U. S. Armed Forces Killed in Action (KIA). The Real Estate Tax Relief Program for Elderly and/or Totally Disabled is currently administered on a need-based system. Need is determined by gross household income and assets, with lower income households receiving proportionately greater amounts of tax relief. Real Estate Tax Relief for Disabled Veterans and Surviving Spouses of a Member of U. S. Armed Forces Killed in Action is mandated by state law. Table 1 shows the amount of revenues foregone for these three programs and the number of participants in calendar year 2015.

Table 1: Revenues Foregone through Real Property Tax Relief Programs, 2015

Program
Revenue Foregone
Total Participants
Elderly and/or Totally Disabled
$2,826,947
903
Disabled Veterans &
Surviving Spouses of Military Killed in Action
$499,019
85
Total
$3,325,966
988


The Real Estate Tax Relief Program for Elderly and/or Totally Disabled Persons is a program provided by City Council and offers full or partial real estate tax exemption and deferral for property owners who are 65 years of age or older or permanently and totally disabled by November 15. Tax relief is prorated for property owners who turn 65 or become disabled between January 1 and November 15. The City provides tax deferral upon request to eligible participants who do not qualify for full tax exemption. Taxes exempted under the program do not have to be paid back, but taxes deferred under the program must be paid when the property changes ownership or when the last program-eligible owner dies. Deferred taxes accrue interest at a rate of five percent per year from the date of deferral until the taxes are paid in full.  

To qualify, applicants must meet both basic eligibility requirements and certain income and asset limitations. In addition to the age and/or disability requirement, the basic eligibility requirements are:

  1. The property for which an exemption or deferral is requested must be owned or partially owned by the applicant on January 1 of the current calendar year;
  2. As of January 1 of the current calendar year, the applicant must occupy the property for which the exemption or deferral is sought as his or her sole residence and must   occupy the property throughout the year.

Table 2 shows the income and asset levels and percentage of tax relief for the Tax Relief Program for Elderly and/or Totally Disabled Persons that were in effect in calendar year 2015.  

Table 2: Income and Assets Requirements

 
Tax Exemption
Percentage of Tax Relief
100%
50%
25%
Deferral
Gross Combined Income Requirement*
$40,000
$55,000
$72,000
$72,000
Asset Requirement**
$430,000
$430,000
$430,000
$430,000

* Gross combined income includes the income of both spouses as well as any income in excess of $10,000 per year of other relatives living in the home
** Asset requirement excludes home value and up to 2 acres of land

Table 3 shows the program statistics of the Elderly and/or Disabled Tax Relief program for calendar year 2015. The data indicates that 903 properties received tax relief and of that 262 properties were above the 2015 average assessed value of $509,853. The total cost of providing tax relief for the elderly and/or totally disabled property owners were approximately $2.8 million. Of the 352 properties that received partial relief, 11 property owners deferred their tax liability totaling $0.03 million.

Table 3: Program Statistics for City Provided Elderly and/or Disables Tax Relief, 2015

Relief Category
Average Assessment
Count
Relief
Value
Max
Assessment
w/in Category
No. of Properties above 2015 avg. assessment (509,853)
Total Relief  Assessments above 2015 avg. assessment
25 percent
 $       443,792
145
$0.2 Million
$1.1 Million
52
$0.09 Million
50 percent
 $       420,690
207
$0.4 Million
$1.5 Million
66
$0.2 Million
100 percent
$       389,317
551
$2.2 Million
$1.3 Million
144
$1.0 Million
Total
$       405,256
903
$2.8 Million
$1.5 Million
262
$1.3 Million
Deferral
$      555,326
11
$0.003 Million
$0.9 Million
8
$0.002 Million


In addition to the Real Estate Tax Relief for the Elderly and/or Totally Disabled Persons, the City also provides tax relief for two state mandated programs, Real Estate Tax Relief for Disabled Veterans and Real Estate Tax Relief for Surviving Spouses of a Member of Armed Forces Killed in Action. Beginning in 2011, the Virginia Constitution requires the General Assembly to exempt from taxation the real property of any veteran who has been rated by the U.S. Department of Veterans Affairs, or its successor agency pursuant to Federal law, to have a 100 percent service-connected, permanent, and total disability, and who occupies the real property as his/her principal place of residence. The surviving spouse of a veteran with such disability is also entitled to claim this exemption as long as the surviving spouse does not remarry and continues to occupy the primary place of residence. A veteran is considered to have a 100 percent service-connected disability if the veteran's disability is rated at 100% or if the veteran's service-connection is rated at less than 100%, but the veteran is paid at the 100% disability rate due to employability. Under either standard, the disability must be considered total and permanent. Veterans with temporary disabilities, no matter how severe, do not qualify for this program. 

Beginning in 2015, the state approved legislation to provide Real Estate Tax Relief to Surviving Spouses of a Member of Armed Forces Killed in Action effective January 1, 2015. This program offers exemption to surviving spouses of any member of the armed forces of the United States who was killed in action, as determined by the U.S. Department of Defense, where the surviving spouse occupies the real property as his/her principal place of residence and has not remarried. Full tax exemption is applied to properties at or below the City’s average assessed value for such year. If the property value is above the average assessed value, the portion above the average assessed value is fully taxable.  

Table 4 shows statistics for this state mandated tax relief program for calendar year 2015. The data indicates that 86 properties received tax relief and of that amount 55 properties in the disabled veterans program were above the 2015 average assessed value of $509,853. The total cost of providing tax relief for these state mandated programs was approximately $0.5 million.

Table 4: Program Statistics for Mandatory Tax Relief Programs of Disabled Veterans & Surviving Spouses of Military Persons Killed in Action, 2015

Average Assessment
Count
Relief
Max Assessment for Category
No. of Properties over 2015 avg. assessment (509,853)
Total Relief  Assessments above 2015 avg. assessment
$600,369
86
$0.5 Million
$1.2 Million
55
$0.4 Million


The Real Estate Tax Relief for Disabled Veterans and Tax Relief for Surviving Spouses of Member of the Armed Forces Killed in Action programs have no income or asset limits and City Council cannot modify the program’s requirements or parameters.




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