Virginia HB 854: Real property tax; local classification or designation for property, nonprofit organizations.

Bill Text

2026 SESSION

INTRODUCED

26104985D

HOUSE BILL NO. 854

Offered January 14, 2026

Prefiled January 13, 2026

A BILL 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.

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Patron—Cousins

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Referred to Committee on Finance

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Be it enacted by the General Assembly of Virginia:

1. That §§ 58.1-3603 and 58.1-3651 of the Code of Virginia are amended and reenacted as follows:

§ 58.1-3603. Exemptions not applicable when building is source of revenue.

A. Whenever any building or land, or part thereof, exempt from taxation pursuant to this chapter and not belonging to the Commonwealth is a source of revenue or profit, whether by lease or otherwise, all of such buildings and land shall be liable to taxation as other land and buildings in the same county, city or town. When a part but not all of any such building or land, however, is a source of revenue or profit, and the remainder of such building or land is used by any organization exempted from taxation pursuant to this chapter for its purposes, only such portion as is a source of profit or revenue shall be liable for taxation.

B. In assessing any building and the land it occupies pursuant to subsection A, the assessing officer shall only assess for taxation that portion of the property as is a source of profit or revenue and the tax shall be computed on the basis of the ratio of the space as is a source of profit or revenue to the entire property. When any such property is leased for portions of a year the tax shall be computed on the basis of the average use of such property for the preceding year.

C. In determining whether any building or land, or part thereof, is a source of revenue or profit, rent from the lease of the property applied to reduce indebtedness against the property by payment of the principal of an outstanding bond or note held by a political subdivision of the Commonwealth shall not constitute revenue or profit, provided that the property is leased to a lessee who is exempt from taxation pursuant to § 501(c)(3) of the Internal Revenue Code and is used by such lessee exclusively for charitable purposes.

D. Any rental income or other sources of income received from any portion of real property that is used for charitable or benevolent purposes in accordance with subsection A of § 58.1-3651 shall not be considered a source of revenue or profit for purposes of this section.

§ 58.1-3651. Property exempt from taxation by classification or designation by ordinance adopted by local governing body on or after January 1, 2003.

A. Pursuant to subsection 6 (a)(6) of Article X of the Constitution of Virginia, on and after January 1, 2003, any county, city, or town may by designation or classification exempt from real or personal property taxes, or both, by ordinance adopted by the local governing body, the:

1. The real or personal property, or both, owned by a nonprofit organization, including a single member limited liability company whose sole member is a nonprofit organization, that uses such property for religious, charitable, patriotic, historical, benevolent, cultural, or public park and playground purposes.

2. The real or personal property, or both, owned by an ownership entity of which a controlling interest of the managing member or general partner of such ownership entity is held directly or indirectly by one or more nonprofit organizations notwithstanding any for-profit ownership interests, that is used for religious, charitable, patriotic, historical, benevolent, cultural, or public park and playground purposes.

The ordinance shall state the specific use on which the exemption is based, and continuance of the exemption shall be contingent on the continued use of the property in accordance with the purpose for which the organization is classified or designated, in whole or in part. Any suspension or termination of such exemption shall be stipulated in the local ordinance. No exemption shall be provided to any organization that has any rule, regulation, policy, or practice that unlawfully discriminates on the basis of religious conviction, race, color, sex, sexual orientation, gender identity, or national origin.

B. Any ordinance exempting property by designation pursuant to subsection A shall be adopted only after holding a public hearing with respect thereto, at which citizens shall have an opportunity to be heard. The local governing body shall publish notice of the hearing once in a newspaper of general circulation in the county, city, or town where the real property is located. The notice shall include the assessed value of the real and tangible personal property for which an exemption is requested as well as the property taxes assessed against such property. The public hearing shall not be held until at least seven days after the notice is published in the newspaper. The local governing body shall collec