- Individuals
- Form 1099G/1099INT
- Estates
- Probate
- Penalties and Interest
Except where noted, use Schedule CR to claim any of these credits and attach it, with required documentation, to your return.
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.
To qualify, the cost of the rehabilitation must equal to 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.
Individual and fiduciary filers complete Schedule CR, Part XI, and corporate filers complete Form 500CR, Part XIII, to claim this credit. Attach Schedule CR and your certification to your return.
Reference: Virginia Code 58.1 -339.2.
Individuals and corporations may take a credit for conveying land located in Virginia for such purposes as historical or conservation preservation, agricultural use, forest use, open space, and natural resource conservation.
To the extent a credit is taken, no subtraction for the gain on the sale of land dedicated to open space use (58.1-322 [22]) shall be allowed for three years following the year in which the credit is taken.
Individual filers complete Schedule CR, Part XXII, and corporate filers complete Form 500CR, Part XXII, to claim this credit.
For Donations Recorded Prior to January 1, 2007
The credit is 50% of the fair market value of the land or interest in land. The maximum credit that can be claimed is $100,000 for 2002 and subsequent taxable years. The credit is not refundable, but it can be carried forward for up to five years. The fair market value is determined by a "qualified appraisal" as prepared by a "qualified appraiser" as those terms are defined under applicable federal law and IRS regulations governing charitable contributions.
For purposes of this credit, any qualified appraiser must be licensed in the Commonwealth. Should the appraiser falsely or fraudulently overstate the value of the contributed property, the Department of Taxation (TAX) is authorized to disallow further appraisals signed by that appraiser and refer the appraiser to the Real Estate Appraisal Board for appropriate disciplinary action. In addition, if TAX determines that an appraisal was false or fraudulent, the agency may disregard the appraisal in determining the fair market value of the property and the allowable tax credit.
The value of the donated interest in the land must be reduced by the amount of gain that would not have been a long term capital gain if the property had been sold by the taxpayer at its fair market value. Also, any open space land, dedicated to fulfill density requirements, is excluded from the Land Preservation Credit.
This credit may be transferred to another taxpayer for use on Virginia income tax returns if the qualified donation was made on or after January 1, 2002. The transfer of the credit must be completed before the end of the tax year in order to use the credit for that year.
The donation or transfer must be registered with the Department of Taxation to be valid. You must use Form LPC-1 to notify the Department of the creation of a new Land Preservation Credit (LPC) donation or of a transfer to another taxpayer of an existing LPC. Form LPC should be submitted to the Department within 60 days of the credit's origination or transfer, or at least 90 days before you file your annual return claiming the credit. The Department will deny any LPC credits that have not been pre-registered.
Legislation enacted by the 2006 General Assembly made significant changes to the requirements for qualifying for and receiving the Land Preservation Credit (LPC). These changes apply only to donations recorded on or after January 1, 2007.
General Information: The LPC is available to taxpayers that convey land or interest in land located in Virginia to a public or private agency eligible to hold such land or interests therein for conservation or preservation purposes. The conveyance must be held in perpetuity.
Standards for Appraisals: When placing a value on a donation, appraisers must follow the Uniform Standard of Professional Appraisal Practice (USPAP) for all LPC donations. In addition, less-than-fee donations must comply with Section 170(h) of US Internal Revenue Code of 1986. The Commonwealth will use these two documents as their appraisal guidelines.
Annual Cap on Credits Granted: The Department of Taxation (TAX) is authorized to acknowledge no more than $102,287,081 in LPC credits for tax year 2008. Taxpayers must file Form LPC-1 to register a donation. The credits will be issued on a "first-come, first-serve basis." A credit will not be allocated from the current year's credit pool until a completed Form LPC-1 application and all supporting documents are received by TAX. This includes the approval from the Department of Conservation and Recreation (DCR) for donations requesting a credit of $1 million or more. Once the annual CAP limit is met, any subsequent credit requests will be issued for the next available calendar year.
Increase in Annual Cap. The amount of the annual limit for each year will be increased by an amount equal to $100 million multiplied by the percentage that the consumer price index (CPI-U) published by the U.S. Department of Commerce, for the 12 month period ending August 31 of the previous year exceeds the CPI-U as of August 31, 2006.
Dual Basis Prohibited. Any building that serves as a basis for the Historic Rehabilitation Credit cannot serve as a basis for the LPC credit nor vice versa for a period of 5 years.
No more than 25% of the total LPC credit allowed shall be for a reduction in value to any structure and other improvements to land.
Amount of Credit. Effective for donations made on or after January 1, 2007, the credit amount is reduced to 40% of the appraised value of the land donation.
Carry Forward. Land Preservation Credits may be carried forward for ten (10) years from the year in which they are issued.
File Form LPC. Form LPC-1 "Application for a Land Preservation Credit" must be completed by the taxpayer and submitted to TAX in order to establish the credit. A copy of Form LPC-1 must also be submitted to the Department of Conservation and Recreation (DCR). The credit must be established and acknowledged by TAX before the taxpayer can transfer the credit or claim the credit on their tax return. If a taxpayer files a return claiming a credit before the credit is acknowledged, processing of the return will be significantly delayed.
All credit requests of $1 million or more must be submitted to both DCR and TAX for review. TAX must receive approval from DCR before the application is considered complete. Once the completed application is reviewed by TAX, an LPC number will be assigned and an acknowledgment letter will be sent to the taxpayer.
Additionally, if a donation is made by the same or related party (immediate family member or an affiliated entity) on any remaining portion of a recorded parcel which has already been used as the basis for an existing LPC within the past eleven (11) years, the existing LPC must be aggregated with the new request to determine if the total credit for that property exceeds $1 million, thus requiring DCR approval.
New Fee on Transfers. Effective January 1, 2007, a fee will be imposed on any transfer arising from the sale of land preservation credits and on all pass-through allocations. The fee does not apply to transfers and allocations on donations made prior to January 1, 2007, even though the actual transfer may not occur until after January 1, 2007. Only transfers of donations recorded on or after January 1, 2007 are impacted by this fee.
The fee will be 2% of the appraised value of the donated interest. Because the statute relates the 2% fee to the donated interest and the credit is 40% of that figure, the fee is equal to 5% of the credit amount being transferred or allocated, as shown in the sample calculation below:
Scenario presented in Code of Virginia Section 58.1-513
Calculation of Credit Value
If $200 is the amount of fee collected at the donated interest level, what percentage of the credit value generates the same fee amount?
The fee is capped at $10,000 per taxpayer per donation. So if you are transferring or allocating credits derived from more than one donation, your fee may exceed $10,000.
Reference: Virginia Code 58.1 - 512.and 513
The 2006 General Assembly passed HB 5019, which made significant changes to the Land Preservation Credit. Below is a table that shows the comparative changes resulting from this legislation. Note that these changes apply only to donations recorded in 2007 and beyond.
| Category | For Donations Recorded in 2006 & Prior | Donations Recorded in 2007 and beyond |
|---|---|---|
| Percentage of Credit | 50% | 40% |
| Carry Forward | 5 Years | 10 Years |
| CAP | None |
2007 = $100 Million 2008 = $102,287,081 |
| Applications | To TAX ONLY | Tax & DCR |
| Transfer Fee | Not Applicable | Calculation is 2% of the donated interest or 5% of the credit amount transferred/allocated |
| Who Pays Fee | Not Applicable | Transferor; Pass-through Entity |
| Fee CAP | Not Applicable | $10,000 per taxpayer per donation |
To register a donation, use Form LPC-1 (PDF 810Kb). To transfer a credit, use Form LPC-2 (PDF 30 Kb). For instructions on applying or transferring credits, see the LPC Application and Transfer Procedures (PDF 30Kb).
Livable Home Tax Credit (formally Home Accessibility Credit). Effective for January 1, 2008 this credit is now being administered by the Department of Housing and Community Development (DHCD). Individuals may be eligible for an income tax credit of $500 for the purchase of a new accessible residence and 25 percent of the cost of retro-fitting activities not to exceed $500. Any tax credit that exceeds the eligible individual’s tax liability may be carried forward for five years. If the total amount of tax credits issued under this program exceeds $1million in a fiscal year, DHCD will pro rate the amount of credits among the eligible applicants. Applications are to be filed with the Virginia Department of Housing and Community Development (DHCD) by February 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.
Forms: LHTC Application and LHTC Guidelines
Individuals may claim a credit equal to 15% of the amount paid by the individual during the taxable year in long-term care insurance premiums for long-term care insurance coverage for himself, but the total credits for any policy may not exceed 15% of the amount of premiums paid for the first 12 months of coverage. Any unused credit may be carried forward for the next five taxable years. In order to determine the amount that may be used as a basis for this credit, the individual must subtract any amount actually included as a deduction on Schedule A of the individual’s federal income tax return. In addition, the individual may not claim this credit to the extent the premiums have been used to claim the Virginia deduction for long-term health care premiums. It may be possible, however, for an individual to claim this credit and the Virginia deduction in the same year.
Example
This credit is based on the amount paid during the taxable year, even if the months covered by the policy extend into the following taxable year. For example, if an individual purchased a policy on July 1 and paid for 12 months, he would base his credit on the entire payment, even though only six months of the coverage period would fall in the taxable year in which he claimed the credit. If however, the individual made payments on a monthly basis, he would claim a credit in the current taxable year for 6 months of premiums and a credit in the second year for the next six months of premiums in order to reach the allowed total of 12 months. In that case, the individual could also claim a deduction in the second year for the 6 months of premiums that were not used as a basis for the credit.
If you are a Virginia taxpayer and you claimed a low-income housing tax credit on your federal income tax return for housing units placed in service in Virginia on or after January 1, 1998, you may qualify to claim the state low-income housing tax credit.
The Virginia credit is a percentage of the federal credit. If in subsequent years you are subject to the federal recapture provisions for this credit, you will also be subject to a recapture amount on your Virginia return.
You must receive certification from the Virginia Department of Housing and Community Development before claiming this credit on your tax return. The allowable credit may not exceed your tax liability. For additional information contact the Dept of Housing and Community Development at 804/371-7117.
Individual filers complete Schedule CR, Part XIII, and business filers complete 500CR Part XV to claim the credit.
Reference: Virginia Code 58.1 - 435 and 36-55.63.
Reference: Virginia Code 58.1- 336.
You may qualify to claim the Credit for Low Income Individuals (CLI) if your total family Virginia adjusted gross income is below federal poverty guidelines. Family Virginia adjusted gross income includes the total Virginia adjusted gross income for you, your spouse and your dependents, even if they do not file their own Virginia returns. If you and your spouse file separate returns, the family income includes income from your return, your spouse's return and any income for any dependents claimed on either return. Only one spouse may claim the CLI. For more information on computing Virginia adjusted gross income, refer to Form 760.
The maximum credit you may claim is $300 for each personal and dependent exemption claimed on your Virginia return. Unlike the Federal Earned Income Credit, this credit is not refundable. The amount of CLI claimed may not exceed your tax liability. Excess credit amounts may not be carried forward to future years.
You may not claim this credit if you, your spouse or any dependent listed on your return claimed one or more of the following exemptions, deductions or subtractions:
In addition, you cannot claim this credit if you were claimed as a dependent on another taxpayer's return.
Claiming the credit is a two-step process. First, you must determine if you qualify for the credit. If so, then you must compute your allowable credit. Use the following table to see if you qualify for the CLI:
| If the number of eligible exemptions is: | Your family Virginia adjusted income must be less than |
|---|---|
| 1 | $10,210 |
| 2 | $13,690 |
| 3 | $17,170 |
| 4 | $20,650 |
| 5 | $24,130 |
| 6 | $27,610 |
| 7 | $31,090 |
| 8 | $34,570 |
For each additional exemption over 8, add $3,480 to the guidelines. Eligible exemptions include personal exemptions only - you may not claim the CLI if you also claim additional exemptions for blindness or age.
If you qualify for the credit, multiply the total number of personal exemptions claimed on your return by $300. The credit cannot be more than your total tax as shown on line 17 of your income tax return, Form 760. Use Schedule ADJ to report the credit.
EXAMPLE:
Mary and John file a joint return (Filing Status 2), and claim exemptions for two dependents. Both spouses have income. One dependent is a teenager with a part-time job. The other dependent has no income. The total tax for both spouses is $235. Eligibility for the CLI and the amount of credit is determined as follows:
| Taxpayer's VAGI | $13,500 | |
| Spouse's VAGI |
|
|
| Dependent 1 VAGI | $1,500 | |
| Dependent 2 VAGI | $0 | |
| Total Family VAGI | $17,000 |
Based on the table, the qualifying income amount for a return reflecting 4 exemptions is $20,650. Because the total family VAGI is less than $20,650, these taxpayers qualify for the CLI. The allowable credit is the number of exemptions multiplied by $300, or the total tax, whichever is less. Four exemptions at $300 each results in a maximum potential credit of $1,200. However, because John and Mary's total tax is only $235, the CLI is limited to $235, resulting in a tax liability of zero. The unused credit balance cannot be refunded or carried over to subsequent taxable years.
To claim this credit, complete Schedule ADJ and attach it to Form 760.
Virginia Earned Income Credit: -- Legislation enacted by the 2004 General Assembly expands the provisions of the credit for low-income individuals (CLI), effectively creating a nonrefundable Virginia earned income tax credit. Beginning with taxable year 2006, individuals may claim the conventional credit, as computed on Schedule ADJ, or claim a credit for 20% of the earned income tax credit (EITC) that they reported on the federal return, whichever is greater.
The provision for claiming 20% of the federal EITC is available to most filers who claimed an EITC, even to individuals who would not otherwise be eligible for the CLI on the Virginia return because of receiving Virginia adjusted gross income that exceeds the federal poverty guideline amounts. As in the past, this credit is nonrefundable. Filers who claim certain deductions and special exemptions, as well as filers who can be claimed as dependents on another individual's returns may not claim the credit. Please review Schedule ADJ for revisions and detailed instructions on the new EITC provision.
Reference: Virginia Code 58.1 - 339.8.
Companies engaged in any business in the Commonwealth, except for retail trade business, may claim a Virginia tax credit if the taxpayer creates at least 100 new full-time jobs in connection with the establishment or expansion of a major business facility.
If a taxpayer is located in an enterprise zone or in an economically distressed area (as defined by the Virginia Department of Economic Development), the threshold is reduced from 100 new full time jobs to 50. The credit is equal to $1,000 per qualified full-time employee (in excess of the 100/50 threshold) who was employed during the credit year. The credit year is defined as the first taxable year following the taxable year in which the major business facility was established or expanded. The credit is claimed in one-third increments over three taxable years beginning with the credit year. The allowable credit may not exceed your tax liability. Unused credits may be carried forward for ten years.
Credits will be recaptured proportionately if employment decreases during the five years following the initial credit year. Compute on Form 304.
Individual filers complete Schedule CR, Part IX, and corporate filers complete Form 500CR, Part X, to claim this credit.
Please Note this Change in Procedures:
All Major Business applications (Form 304) must be submitted to the Department of Taxation,Tax Credit Unit, PO Box 715, Richmond, VA 23218-0715 90 days prior to filing your return. Form 304 is no longer part of your income tax return. This credit requires certification from the Tax Credit Unit to be claimed on your tax return. A letter will be sent to certify the credit. This letter must be attached to your return.
Reference: Virginia Code 58.1 - 439.
A business contributing to an approved Neighborhood Assistance Program (NAP) organization may receive a state tax credit equal to 40 percent of their contribution. Eligible business contributions include cash, stock, goods, real estate, rent/lease of nonprofit's facility, and limited health care, professional, and contracting services. Tax credits are available if the contribution value is at least $1,000 or no more than $437,500. The minimum tax credit issued for a business contribution is $400 ($1,000 X .40). A contributing business may take a maximum of $175,000 ($437,500 X .40) in NAP credits for any tax year.
Individuals who contribute directly to an approved NAP organization may also receive a state tax credit equal to 40 percent of their contribution. However, only cash contributions and or marketable securities are eligible. The minimum donation by an individual must be at least $500 for a $200 ($500 x .40) tax credit. No maximum tax credit cap is imposed for individuals unless all available tax credits are allocated. Then, the maximum tax credit per taxable year for individuals will be $50,000.
Applications from organizations wishing to participate in NAP must be received in the Virginia Department of Social Services by the first business day in May each year. For a list of currently approved organizations or additional information, contact the Virginia Department of Social Services, Neighborhood Assistance Program, 7 N 8th St., Richmond, VA 23219.
Individual filers complete Schedule CR, Part III, and corporate filers complete Form 500CR, Part II, to claim this credit. All filers must also attach their credit certificate from DSS to the income tax return.
Reference: Virginia Code 58.1 - 333.
You may qualify to claim this credit if you made contributions to political candidates in a primary, special, or general election for local or state office. The election must be held in the year in which the contribution is made.
The Virginia credit is equal to 50% of the political contributions made to candidates for state and local offices, not to exceed $25 for an individual taxpayer or $50 for taxpayers filing a joint return. The credit is non-refundable and unused credits cannot be carried forward to subsequent years.
Complete Schedule CR, Part XXIII, to claim this credit. If this is the only credit you are claiming, you may omit Schedule CR, and fill in the Political Contributions Credit oval on your income tax return.
Reference: Virginia Code 58.1 - 339.6.
Last Updated 12/8/2008 12:24
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