An Act to amend and reenact §§ 58.1-3603 and 58.1-3651 of the Code of Virginia, relating to real property tax; local classification or designation for portion of property.
HB854 amends Virginia’s real property tax statutes governing exemptions for nonprofit and charitable property. The bill clarifies that when only part of an otherwise tax-exempt building or parcel is used to generate revenue or profit, only that taxable portion is subject to assessment, rather than the entire property. It also adds a rule that rental income used to reduce debt on property leased to a 501(c)(3) organization for exclusive charitable use does not count as revenue or profit for purposes of determining taxability.
The bill also updates the local-option exemption process under § 58.1-3651 for property designated by county, city, or town ordinance. It preserves local authority to exempt property owned by nonprofits and certain mixed-ownership entities used for charitable or benevolent affordable housing, while requiring the ordinance to specify the exempt use and to address suspension or termination conditions. The bill continues to bar exemptions for organizations with policies that unlawfully discriminate on protected grounds.
HB854 narrows and clarifies how local assessing officers determine the taxable portion of mixed-use property owned by exempt organizations, which can reduce tax liability for nonprofits that lease out only part of a building or use rental proceeds to support charitable operations. It also reinforces the framework for local real and personal property tax exemptions by classification or designation, affecting counties, cities, towns, nonprofit owners, affordable housing entities, and assessors applying the exemption rules under §§ 58.1-3603 and 58.1-3651.
The available record shows the bill was enacted as Chapter 683 with no recorded committee transcript or vote history in the provided materials, so there is no documented floor or committee debate to indicate opposition. The enacted status suggests the measure had sufficient support to pass, and its focus on technical clarification and nonprofit tax treatment is consistent with a generally favorable reception.
No specific points of contention are documented in the provided materials. Based on the text, any potential debate would likely center on whether the bill appropriately limits taxation to revenue-producing portions of exempt property, how broadly local governments may grant exemptions, and whether the affordable housing and nonprofit provisions could reduce local tax base revenue. However, no named stakeholders or opposing arguments are recorded here.