Communities of Opportunity Tax Credit

For tax years beginning on or after Jan. 1, 2010, a tax credit may be claimed by landlords with qualified housing units located in census tracts with poverty rates of less than 10% in the Richmond Metropolitan Statistical Area who participate in the Housing Choice Voucher program.

The amount of tax credit for an eligible property will be based on 10% of annual fair market rent for that specific unit and prorated when units are qualified for less than the full tax year. Prorations will be based on full calendar months. A landlord may receive tax credits on one or more units within the same tax year. Credits taken for any one tax year cannot exceed the tax liability for that year. Credits not taken for the year for which they are allocated may be carried forward, but cannot be carried forward for more than 5 years.

To be eligible for the credit, participating landlords must apply to the Department of Housing and Community Development. The maximum amount of credit that may be issued in a fiscal year is $250,000. Should eligible applications received by the March 1 deadline exceed the annual appropriation, tax credits will be prorated based on the total amount of qualified requests received and the total amount of credits available. If the annual appropriation for tax credits is not fully allocated based on qualified applications received by the March 1 deadline, the remaining balance will be allocated on a first-come, first-served basis. Unused balances will not be allocated more than 3 years after the tax year in which they were first made available.

Credits granted to a partnership, limited liability company, or electing small business corporation (S corporation) shall be allocated to the individual partners, members, or shareholders in proportion to their ownership or interest in such business entity. The landlord must assume responsibility for distributing credits in this manner. No person shall be allowed both a Communities of Opportunity Tax Credit and a Rent Reductions Tax Credit under Va. Code § 58.1-339.9 for the rental of the same dwelling unit in a taxable year.

For additional information, please contact: Virginia Department of Housing and Community Development, Main Street Centre, 600 East Main Street, Suite 300, Richmond, VA 23219, or call 804.371.7000.

Reference: Virginia Code 58.1-439.12:04

Enterprise Zone Act Credit

Businesses qualified prior to July 1, 1995 may be able to claim a general tax credit against the tax due on taxable income within the zone. The credit is a percentage of the tax due on taxable income from within the zone. In addition, a credit for a percentage of unemployment tax due on zone employees may be claimed.

Businesses qualified between July 1, 1995 and June 30, 2005 may take a credit against the tax due on the zone's taxable income and may be eligible for the real property improvement tax credit or the investment tax credit.

Effective July 1, 2005, the Enterprise Zone Act Credit was replaced with a grant program administered by the Virginia Department of Housing and Community Development (DHCD). Certain businesses that signed agreements with DHCD prior to the expiration of the act's provisions may continue to claim the business tax credit and the real property improvement credit.

For forms and more information about this credit, visit the DHCD website.

All filers must complete Form 301 and attach the certificate of qualification from DHCD to claim this credit. If applicable, attach the Certificate of Unemployment Tax Credit from the Virginia Employment Commission (VEC). Individuals must also complete Schedule CR, Part II, to claim nonrefundable credits, and Part XXVI to claim the Real Property Improvement Credit, which is refundable. Corporate filers must complete Form 500CR, Part III, to claim nonrefundable credits, and Part XXVI to claim the Real Property Improvement Credit.

Complete Form 301 and Schedule 500CR, Part III, to claim this credit. Attach the certificate of qualification from DHCD and a completed Form 301. If applicable, attach the Certificate of Unemployment Tax Credit from the VEC.

Historic Rehabilitation Credit

An individual, estate, trust, or corporation incurring eligible expenses in the rehabilitation of a certified historic structure is entitled to claim a credit against their respective taxes.

The credit is equal to 25% of rehabilitation expenses for projects completed in 2000 and thereafter.  For taxable years beginning on and after July 1, 2017, you may claim a credit of up to $5 million, not to exceed your tax liability. 

To qualify, the cost of the rehabilitation must equal at least 50% (25% if the building is owner occupied) of the assessed value of the building for local real estate tax purposes prior to the rehabilitation. The rehabilitation work must be certified by the Virginia Department of Historic Resources and be consistent with The Secretary of the Interior's Standards for Rehabilitation. The allowable credit may not exceed your tax liability. Unused credits may be carried forward for 10 years.

Applications for certification of buildings and rehabilitation projects may be obtained from the Virginia Department of Historic Resources, 2801 Kensington Avenue, Richmond, VA 23221. You must receive certification of the credit before claiming it on your tax return.

This credit may be allocated among owners in proportion to each owner's percentage of ownership or interest in the pass-through entity, or as the owners mutually agree, or as provided in the partnership agreement or other entity document using Form PTE within 30 days after the credit is granted but at least 90 days before filing an income tax return.

Individual and fiduciary filers complete Schedule CR, Section 1, Part 11, and corporate filers complete Form 500CR, Section 1, Part 11 to claim this credit. Attach Schedule CR and your certification to your return.

Reference: Virginia Code 58.1 -339.2.

Livable Home Tax Credit

This credit is administered by the Department of Housing and Community Development (DHCD). Individuals and licensed contractors who are corporations may be eligible for an income tax credit of $5000 for the purchase of a new accessible residence and 50% of the cost of retrofitting activities, not to exceed $5000.

Any tax credit that exceeds the eligible individual's tax liability may be carried forward for 7 years. If the total amount of tax credits issued under this program exceeds $1 million in a fiscal year, DHCD will pro rate the amount of credits among the eligible applicants. Applications are to be filed with the DHCD by Feb. 28 of the year following the year in which the purchase or retro-fitting was completed. For additional information please contact Kathy Robertson at 804.225.3129.

Reference: Virginia Code 58.1-339.7

Neighborhood Assistance Act Credit

The purpose of the Neighborhood Assistance Program (NAP) is to encourage individuals, trusts and businesses to make donations to approved 501(c) (3) (4) non-profit organizations for the benefit of low-income persons or an eligible student with a disability. To be considered for the NAP program, a 501(c)(3) (4) non-profit organization would submit an application to the Department of Social Services (DSS) or Department of Education (DOE) by the first business day of May each year. Applicants submitting all required information and meeting the eligibility criteria will be determined approved organizations.

  • Individuals making a donation of cash or marketable securities directly to an approved NAP nonprofit organization may be eligible for the credit. The NAP state tax credit for an individual may be offered up to 65% of the donation's value. To qualify, individuals must donate at least $500. An individual may be eligible to receive a NAP tax credit for a donation value up to $125,000 per taxable year.
  • Trusts making a donation of cash, stock, merchandise, real estate, and rent/lease of non-profit's facility directly to an approved NAP nonprofit organization may be eligible for the credit. The NAP state tax credit for a trust may be offered up to 65% of the donation's value. To qualify, a trust must donate at least $616 per taxable year.
  • Businesses making a donation of cash, stock, merchandise, real estate, rent/lease of non-profit's facility, professional services, or contracting services directly to an approved NAP nonprofit organization may be eligible for the credit. The NAP state tax credit for a business may be offered up to 65% of the donation's value. To qualify, a business must donate at least $616 per taxable year.
  • Limited health care, pharmaceutical, mediation, or physician specialists providing services directly to an approved NAP non-profit organization may be eligible for the credit. The NAP state tax credit may be offered up to 65% of the donation's value. The minimum donation value must be at least $616 per taxable year.

A NAP tax credit is non-refundable and non-transferable. Excess donor credit, if applicable, may be carried forward for the next 5 taxable years.

To claim the NAP state tax credit on an income tax return:

  • An individual filer must complete Schedule CR, Section 1, Part 3
  • A business filer must complete Form 500CR, Section 1, Part 2
  • A trust must claim the credit on Form 770, line 5(e)

Information about the application process or making a donation to a NAP approved organization can be found at the Department of Social Services Neighborhood Assistance Program or by calling 804.726.7920 or 804.726.7924.

Reference: Virginia Code 58.1-439.18:24