Communities of Opportunity Tax Credit

You may qualify to claim this credit if:

You’re a landlord with qualified housing units participating in the Housing Choice Voucher program. Housing units must be located in the Richmond Metropolitan Statistical Area or the Virginia Beach-Norfolk-Newport News Metropolitan Statistical Area.

The Virginia Department of Housing and Community Development (DHCD) administers this credit. 

What is it?

An income tax credit equal to 10% of the annual market rent for the specific qualifying housing unit. If a unit is qualified for less than a full year, the credit amount will be prorated. 

The credit cannot be greater than your tax liability. You may carry forward any unused credits for 5 years. You can’t claim this credit and the Rent Reductions Credit for the same housing unit in the same year.

Claim the credit against the following taxes administered by Virginia Tax:

  • individual income tax
  • corporation income tax

What is a qualified housing unit?

Qualified housing units are apartments or other rental property where a Housing Choice Voucher Housing Assistance Payment contract has been set up with the local public housing authority (PHA) or PHA contractor. The units must be located in areas of the Richmond Metropolitan Statistical Area with poverty rates of less than 10%.

For complete details, please see the program guidelines on the DHCD website.

Is there a cap?

Yes. DHCD cannot issue more than $250,000 in livable home tax credits per fiscal year. If the total amount of eligible applications received by March 1 exceeds $250,000 in a fiscal year, DHCD will prorate the amount of credits among eligible applicants. If the total amount has not been issued based upon applications received by March 1, the remaining balance will be issued on a first come, first served basis.

To apply for this credit:

DHCD administers the credit.  Visit their website and follow their application procedure.  

Using the credit:

To claim the credit, complete the following and attach it to your return:

For more information, see Va. Code § 58.1-439.12:04

Enterprise Zone Act Credit

In July 2005, the Department of Housing and Community Development (DHCD) replaced the Enterprise Zone Act Credit with a grant program. Businesses who signed agreements with DHCD before the credit expired may continue to claim the credit.

Historic Rehabilitation Credit

You may qualify to claim this credit if:

You’re rehabilitating a certified historic structure, and have certain eligible expenses. The structure could be one you’re living in, or it could be income-producing property.

The Virginia Department of Historic Resources (DHR) oversees this credit. You’ll find more information about the credit on the DHR website.

What is it?

A tax credit equal to 25% of the eligible expenses for the project. You can claim a credit of up to $5 million on your return, not to exceed your tax liability. Any unused credits may be carried forward for 10 years.

To qualify for the credit, the cost of the rehabilitation must be at least 50% of the assessed value of the structure prior to the rehabilitation, or 25% if you live in the structure.

Claim the credit against the following taxes administered by Virginia Tax:

  • individual income tax
  • fiduciary income tax
  • corporation income tax
  • bank franchise tax
  • insurance premiums license tax

The credit may also be claimed against certain utilities taxes administered by the State Corporation Commission.  Please visit the SCC website for more information.

What do you mean by “rehabilitation?”

Fixing up the structure so that you can continue using it while maintaining its historic character. You could also be working on it so that it can be used for a new purpose. The work must meet the Secretary of the Interior’s Standards for Rehabilitation.  

What is a certified historic structure?

One that is:

  • listed on the Virginia Landmarks Register,
  • certified as eligible for listing, or
  • certified as a contributing structure to a district listed on the Virginia Landmarks Register

Please see the DHR website for further details.

What are eligible expenses?

Generally, work on the structure of the building, or certain site work, necessary to rehabilitate the structure are considered eligible expenses. Most enlargements and additions do not qualify. DHR certifies the work for the credit. Please see their website for more details on eligible expenses.  

To apply for the credit:

You will need to have the credit certified by DHR. Visit their website, and follow their application process.   

Using this credit:

Claim the credit on your Virginia tax return for the year DHR certified the rehabilitation. You can claim a credit of up to $5 million on your return, not to exceed your tax liability. Any unused credits may be carried forward for 10 years. To claim the credit, complete the following and attach it to your return:

To allocate the credit among members of a limited partnership or other pass-through entity, complete Form PTE within 30 days of the credit certification, but at least 90 days before filing your income tax return. The credit may be allocated as mutually agreed to by the partners, or as laid out in the partnership agreement or other documentation.

Related

Livable Home Tax Credit

You may qualify to claim this credit if:

  • You purchase or build a new accessible residence; or
  • You retrofit an existing residence with accessibility features

The Virginia Department of Housing and Community Development (DHCD) administers this credit. 

What is it?

A tax credit equal to:

  • $5,000 for the purchase of a new accessible residence; or
  • 50%of the cost of retrofitting an existing residence, not to exceed $5,000

Rental units are not eligible for this credit. The credit cannot be greater than your tax liability. You may carry forward any unused credits for 7 years.

Claim the credit against the following taxes administered by Virginia Tax:

  • individual income tax
  • corporation income tax

What is an “accessible residence?”

An accessible residence is a home that includes accessibility or universal visitability features. These features are explained in the LHTC Guidelines, found on the DCHD website

To qualify for the credit, a new residence must include the 3 features of Universal Visitability, or at least 3 accessibility standards, and meet the requirements of an existing standard. Retrofitting an existing residence must include at least 1 accessibility feature that becomes a permanent part of the structure, and meet the requirements of an existing standard.  Features added to comply with certain existing federal, state or local regulations do not qualify for the credit. See the LHTC Guidelines for more details.

Is there a cap?

Yes. DHCD cannot issue more than $1 million in livable home tax credits per fiscal year. If the total amount of tax credits issued under this program exceeds $1 million in a fiscal year, DHCD will prorate the amount of credits among eligible applicants. 

To apply for the credit:

DHCD administers the credit.  Visit their website and follow their application procedure.  Applications are due with DHCD by February 28 of the year after your purchase or retrofitting work is completed.

Using the credit:

To claim the credit, complete the following and attach it to your return:

Neighborhood Assistance Act Credit

You may qualify to claim this credit if: 

You donate cash, marketable securities, or other items/services directly to an approved Neighborhood Assistance Program (NAP) non-profit organization. The purpose of the NAP is to encourage donations to approved non-profit organizations to benefit low-income persons or an eligible student with a disability.

What is it?

A tax credit of up to 65% of the donation's value.

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

Claim the credit against the following taxes administered by Virginia Tax:

  • individual income tax
  • fiduciary income tax
  • corporation income tax
  • bank franchise tax
  • insurance premiums license tax

The credit may also be claimed against certain utilities taxes administered by the State Corporation Commission.  Please visit the SCC website for more information.

Who may be eligible for the credit?

  • Individuals donating cash or marketable securities. The minimum donation must be at least $500 per taxable year. An individual is limited to a maximum donation value of $125,000 per taxable year.  
  • Trusts donating cash, stock, merchandise, real estate, and the rent/lease of a non-profit's facility.  The minimum donation must be at least $616 per taxable year.
  • Businesses donating cash, stock, merchandise, real estate, the rent/lease of a non-profit's facility, professional services, or contracting services. The minimum donation must be at least $616 per taxable year.
  • Limited health care, pharmaceutical, mediation, or physician specialists providing services for an approved NAP non-profit organization. The minimum donation must be at least $616 per taxable year.

To apply for the credit:

To determine your eligibility, contact the NAP non-profit organization to which you would like to make your donation and fill out the appropriate donor form. Return the completed donor form to the NAP non-profit organization. The NAP non-profit organization will forward the completed donor form to the Department of Social Services or the Department of Education to have your NAP tax credit certificate issued. The NAP tax credit certificate will be mailed directly to the donor.

To claim the credit on the Virginia income tax return: 

For more information on the NAP program, email the Department of Social Services at NAP@dss.virginia.gov or the Department of Education at tax.credits@doe.virginia.gov.