Virginia is a great place to live and own real estate. Whether you are an investor, property manager, or homeowner considering a new property in the state, you'll be happy to know that Virginia is home to breathtaking natural attractions, has a steady job market, and cultural diversity.
It also boasts a low tax rate of 0.80 percent, which is lower than the national average of 1.07 percent. Even so, taxes play an important part in any real estate investment, so it's important to stay on top of things to avoid penalties, interest, and other more serious consequences.
The good news is that navigating your taxes doesn't have to be challenging. In this guide, we'll explain the ins and outs of property taxes to ensure that you have access to the information you need.
Understanding Property Taxes in Virginia
Although property tax rates are below the national average, it's important to remember that property value is often high across the state, so homeowners and investors end up paying the same amount in taxes as many in other states.
In Virginia, the amount paid toward taxes is determined using the assessed value of the property and the tax rate. The assessed value is determined by the assessors every two to six years. Cities in Virginia are obligated by state law to review the assessed value of properties every two years, and counties are required to do this once every four years.
Smaller counties and cities with fewer than 50,000 and 30,000 people, respectively, may vote every four, five, or six years for a reevaluation.
The goal of a reassessment is to evaluate a building's fair market value. This is the asking price for the property. An incorrect assessment can result in years of extra taxes, which is why it's critical that owners review their assessment notice. Keep in mind that Virginia also requires that homeowners pay personal property taxes, which is a type of tax charged on non-fixed items on the property, such as motor vehicles.
Property owners are allowed to appeal their assessments if they feel that the value is too high. To do this, they can approach their local board of assessment. If they do not receive the help they need there, they can go to the Board of Equalization and Assessment Review.
How Many Times a Year Do You Pay Property Tax in Virginia?
Property taxes in Virginia are paid in two installments. The first installment is due by the 25th of July, while the second is due by the 5th of December. However, should the due date fall on a weekend, then your property taxes will be due by the next business day.
It's important to remember that due dates may vary from one state to another, so it's important to check with local governments to ensure that you are meeting these deadlines.
The Consequences of Late Payments
Unfortunately, failing to meet the deadline will result in penalties. That's because these taxes are important resources for local governments and other taxing bodies. In the section below, we'll explore the most common penalties for missed payments.
- Interest charges and penalties. When you fail to make payment on time, interest and penalties are charged to your account. The rates will vary from one county to another, but as interest starts to accrue, it can make getting your account up to date that much harder.
- Tax lien. Suppose you still fail to pay your taxes. In that case, local governments may place a lien on your property, which allows them to sell the property if the outstanding taxes remain unpaid.
- Sale of your property. In extreme cases of non-payment, a property may be sold to recover the unpaid taxes.
In addition to these consequences, legal fees and a poor credit rating are also common penalties that you will suffer for failing to meet payment deadlines. This is why it is imperative that you ensure that your property taxes are up to date.
How to Pay a Property Tax Bill in Virginia
Whether you choose to make Fairfax County or Loudoun County your home, it's essential to familiarize yourself with the payment methods available for paying your property taxes. These payment options vary from one county or city to another, so it's important to consult your tax bill or local assessor's office if you are unsure.
Most counties offer both online and in-person payment options, so you can take advantage of either one to ensure that your taxes are paid for the current tax year.
How Much Is Property Tax in Virginia?
There are a number of factors that determine the property tax amount that you will pay. These include the following:
Assessed or Fair Market Value
Perhaps the most important determining factor is the assessed value of the property. Local assessors will consider the size, condition, improvements made, the condition, the age of the property, and more when evaluating the fair market value.
Property and Personal Property Tax Rate
The truth is that each county will have its own property tax rates, which ultimately affect the amount that you pay. These rates determine the percentage of the assessed value that will count as your tax amount.
The Type of Property
Not all properties in Virginia are taxed the same way. A commercial building may be taxed differently from a residential property, for example, and a multi-family home could be taxed differently from a single-family home.
The state offers certain exemptions, which we will discuss later in this article. If you qualify for any of these exemptions or deductions, you can enjoy a lower overall property tax obligation.
Local Government Policies
Budget decisions and other changes to local policies could also impact the amount you pay toward property taxes. This is why you must ensure that you keep track of any changes that could affect tax rates.
How Is Property Tax Calculated in Virginia?
There are so many factors that come into play when determining the tax amount you pay. This is why it is always best to visit your local assessor's office for a more accurate picture of your property tax amounts. However, here is a formula you can use to get an idea of how much to expect on your next property tax bill:
Property Tax = Assessed Value of the Property X Tax Rate / 100
Keep in mind that assessed values are determined by assessors every two to six years.
How Can I Lower My Property Tax in Virginia?
Fortunately, there are ways you can lower your tax premiums. It’s essential to explore these options, as it can significantly improve your bottom line.
Appeal Your Property Assessment
Because properties are not reviewed annually, assessed values tend to vary from market values. Moreover, the state performs an annual sales ratio investigation to determine the assessment-to-market value ratio. While ratios are usually close to 100 percent, they are not always.
As a result, when a home is reassessed, the assessed value may change drastically. According to Virginia state law, the total property tax in a particular tax district may not rise by anything more than one percent because of a reassessment. However, individual property taxes are not subjected to this rule and can be increased by any amount.
This is why you should file an appeal if you notice that your real estate tax rate has increased significantly.
Look Into Disaster Relief
In areas where there have been natural disasters, many local governments will offer property tax relief. It's important to pursue relief during these devastating events, as natural disasters can put a significant strain on your pocket.
Investigate Personal Property Tax Relief Programs and Exemptions
There are a number of other tax relief programs and exemptions that may be available in your county. These can significantly lower the amount you pay toward property taxes, so it's important to check whether you qualify for any of them.
Details will vary from one county to the next, but here is an overview of some of the most common exemptions provided in the state of Virginia:
- Exemption for those who are blind and disabled.
- Land use exemption - This exemption is offered when a property is designated for certain usages, such as for agricultural, forestal, or horticultural use.
- Non-profit organization exemption.
- Disabled veteran exemption - offered to veterans whose injuries and disabilities are a direct result of their military service.
- Historical property exemption - Certain properties may qualify for this exemption if they have been identified as having historical significance.
- Homestead exemption - If your property in Virginia is your primary residence, then you may qualify for a reduction in the assessed value of your home, which lowers the overall property tax amount you pay.
- Exemption for military service members - If you are actively serving in the military, you may qualify for this tax exemption.
Again, the types of exemptions and the criteria that must be met for one to qualify for these exemptions may vary from county to county or city to city. This is why it is important to check local laws when applying for an exemption.
With a thriving economy, a high quality of life, and much more, Virginia offers many opportunities for investors. However, you must remember that property tax will play an important role in determining your bottom line, so it's essential to stay on top of things.
Although property taxes may seem like a daunting and challenging fete, arming yourself with information can make a world of difference when navigating the details of tax laws. Be sure to consult a tax advisor and visit your local assessor's office to learn more about payment due dates, payment methods, and more.
By staying informed, you can ensure that you are protected from penalties and possible foreclosure.