A BILL to amend the Code of Virginia by adding in Article 13 of Chapter 3 of Title 58.1 a section numbered 58.1-439.12:13, relating to income tax credit; affordable rental housing tax credit.
HB946 creates a new nonrefundable individual income tax credit for landlords who rent qualifying affordable dwelling units in Virginia. For taxable years beginning on or after January 1, 2026, and before January 1, 2031, an eligible landlord may claim $750 per certified affordable unit rented, subject to a $15,000 annual cap per landlord and a $5 million statewide annual cap. The credit applies against Virginia income taxes imposed on individuals and certain pass-through entities, and unused credit may be carried forward for up to five additional taxable years.
The bill defines an "affordable dwelling unit" as a unit certified by the Department of Housing and Community Development and requires rent to be no more than 30 percent of area median income for the locality, while also meeting applicable safety and habitability standards under the Virginia Residential Landlord and Tenant Act. Eligible landlords are limited to individuals, small Virginia LLCs with 10 or fewer employees, and 501(c)(3) nonprofits engaged in rental housing; the bill excludes larger investor-backed entities, partnerships, corporations, and certain real estate investment trusts holding interests in more than 50 single-family homes. DHCD must certify qualifying units and the Tax Commissioner must issue implementing guidelines.
HB946 would add a new section to Title 58.1 of the Code of Virginia establishing a state income tax incentive for affordable rental housing. It would require the Department of Housing and Community Development to create certification guidelines and verify qualifying units, while the Tax Commissioner would administer the credit and issue guidance exempt from the Administrative Process Act. The measure would affect landlords who rent affordable units, particularly small-scale and nonprofit housing providers, and would limit the credit’s availability through eligibility rules, annual caps, and a first-come, first-served allocation system.
The available legislative history suggests the bill did not advance out of committee and was continued to the next session in the Finance Committee by voice vote. That procedural outcome indicates the proposal received enough interest to remain under consideration, but not enough consensus for immediate passage. Because there are no recorded floor votes or committee transcript excerpts, the overall sentiment can only be characterized as cautious or unresolved rather than clearly supportive or opposed.
The main points of contention likely center on who should qualify for the credit and how broadly the incentive should be available. The bill favors small landlords and nonprofits while explicitly excluding larger corporate landlords, partnerships, corporations, and certain REIT-like entities, which could draw debate over fairness, market impact, and administrative complexity. Other likely issues include the cost of the $5 million annual cap, whether the credit would meaningfully increase affordable housing supply, and whether the rent and certification standards are workable for landlords and DHCD.