Real estate

The Board of Supervisors expanded real estate tax relief for seniors and people with disabilities for the first time in 15 years December 7, adding a new income bracket and raising the income and net worth threshold for eligibility. 

The county’s tax relief program allows all county residents at least 65 years old, as well as those who are permanently or totally disabled, to receive tax relief for real estate, rent and vehicles. The expansion applies only to real estate relief. 

Fairfax County additionally offers tax relief for disabled veterans and their spouses, surviving spouses of a member of the armed forces killed in action, or surviving spouses of a first responder who died in the line of duty. 

Previously, the real estate tax relief program consisted of three brackets of 100 percent, 50 percent and 25 percent tax relief for gross incomes of $52,000 or less, $52,001-$62,000 and $62,001-$72,000, respectively. Eligible applicants were required to have combined net assets under $340,000, which excludes the value of the home, furnishings and up to one acre of land. 

The expansion modifies the brackets by creating a new one and raising the income threshold. There will now be four brackets, which correspond to 100 percent, 75 percent, 50 percent and 25 percent relief for incomes of $60,000 or below, $60,001-$70,000, $70,001-$80,000 and $80,001-$90,000, respectively. 

It also raises the maximum eligible net worth and amount of land that can be excluded. Those with a combined net worth less than $400,000 are now eligible, and up to five acres of land that cannot be subdivided from the net worth calculation of homes can be excluded.

Participants will additionally be able to defer tax payments under the expansion. Households must have a combined income of $100,000 or less and a combined net worth of $500,000 or less to be eligible for deferment. According to the policy, deferred taxes would be subject to interest at the Wall Street Journal prime rate plus 1 percent per year for a maximum annual interest rate of 8 percent. 

The current program relieves approximately $28.7 million annually, according to Fairfax County Tax Administration Director Jay Doshi. The expansion is expected to grow that amount by $12.7 million, with a possible additional $2.2 million once tax deferrals begin. 

Doshi added that about 7,000 people participate in the real estate tax relief program, 800 of which are people with disabilities. The recent changes are expected to add about 2,500 new participants. 

“As real estate assessments and the cost of living rise, there are real impacts on those with low or fixed incomes, especially our seniors,” Board Chairman Jeff McKay wrote when asked what prompted the expansion. 

“Despite a robust residential real estate market, I continue to be concerned about our heavy reliance on property taxes to balance the budget,” McKay added. “We will continue our work to advocate to the General Assembly for increased taxing authority to diversify our income sources.”

McKay stated that the Board may review eligibility requirements for renters and vehicles “in the coming years.” He explained that the income and net worth threshold is different for renters than homeowners because renters do not pay real estate taxes. He then noted the county offers other programs for rental assistance, including through the Housing Voucher Program and county-owned affordable housing.

The number of senior renters in the Commonwealth is projected to rise by 75 percent between 2020-2040, according to the Urban Institute, a Washington, DC-based think tank that studies economic and social policy. The increased demand for affordable housing for seniors is projected to outstrip supply, the Urban Institute says, raising the need for more extensive social assistance.

McKay wrote that the Board set a goal of building 5,000 new affordable homes by 2034, which includes housing for seniors. As of May 2021, more than 1,800 new units were already constructed. 

The expanded real estate tax relief will be phased in over the next two years. The increased net worth and income caps will go into effect in January, and the new 75 percent tax relief bracket and tax deferral option will be implemented in January 2023. 

Applications for the tax relief program are available at https://bit.ly/32donnU and can be emailed, mailed, or faxed to the county’s tax office.

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