Rehabilitated Real Estate Program

The City of Manassas has a program for a tax exemption for property that is substantially repaired, rehabilitated, or replaced. The exemption program was adopted to encourage renovation and revitalization of underutilized, aging and deteriorating structures located in the City. By improving the quality, condition and appearance of existing properties, Manassas will become a more appealing place for homeowners and businesses to invest.

The amount of tax exemption is based on the increase in building value of a structure that has been rehabilitated, renovated, or replaced. The exemption is allowed for all property types: residential, commercial or industrial, and hotel and motel. Certain minimum age requirements apply.

The following sections will describe the program requirements, program benefits, and other information for each property type. Tax savings examples are also included.

Program Requirements:
  • The structure (building) must be at least 25 years old for residential; 35 years old for hotels/motels; and 20 years old for commercial or industrial.
  • An application for “Tax Exemption for Rehabilitated Structures” must be filed with the Commissioner of the Revenue’s Office at the time a permit is filed for renovation. Review the ordinance criteria prior to filing the application to determine if the planned revitalization qualifies (Contact the Commissioner of the Revenue’s office for assistance). Requirements in the ordinance place limitations on structure additions based on property type.
  • The Commissioner will schedule an inspection for an appraisal of the existing structure once a tax exemption application is received. The appraisal will establish the structure’s base value for the program. Any structural changes made prior to inspection will be incorporated in the structure’s base value.
  • Work must be completed by December 31 of the third year following the year in which the application for tax exemption is made.
  • The Commissioner of the Revenue’s office will make a final appraisal upon substantial completion of work on the structure. This will establish the structure’s final value. Final value must exceed the base value by at least 25%. The request for final appraisal must be made before November l for exemption in the following calendar year.
Program Benefits
Qualifying property owners shall receive an exemption of the taxes associated with the increase in structural value due to renovation, rehabilitation or replacement (i.e., final structural value compared to base structural value), provided all program requirements are met. The owner will receive a full exemption of the increase over a specified time period, with the exemption being phased out over a few years.
  • The tax exemption will transfer with the property.
  • Delinquent taxes must be paid to participate.
Additional Information:
  • No exemption will be granted on land value.
  • All work done must conform to existing City regulations.
  • The amount of tax exemption will be fixed and will not grow over time. It may be reduced in the event the value of the property declines in the future.
  • Taxes will be assessed and due at 100% during the construction phase (i.e., prior to final appraisal).
  • There is a program application fee (nonrefundable) of $50 for residential properties and $50 for all other type properties.
  • Amenities such as swimming pools and garages generally will not qualify for the program.
TAX EXEMPTION SCHEDULE
COMMERCIAL
RESIDENTIAL
INCREASE IN SIZE
YEAR
100%
101-200%
201% UP
YEAR
UP TO 30%
1-10
100
50
25
1-5
100
11
80
40
20
6
80
12
60
30
15
7
60
13
40
20
10
8
40
14
20
10
5
9
20
15
0
0
0
10
0

EXAMPLE (COMMERCIAL)
You own a commercial or industrial property worth $1,500,000 that is at least 20 years old. The land is worth $500,000, and the original building (base) is worth $1,000,000.

During the rehabilitation process, the value of the building increases by 25%, or $250,000. Based on a tax rate of $1.21 per $100 of value, the additional tax on the increase in value is $3,025. This is the exemption amount that will be used to calculate total taxes due during the program period.

During the initial year in the programs, taxes without the exemption are $21,175. With the exemption, taxes are $18,150 – a savings of $3,025 in the year.

Assuming the tax rate and assessed value do not change over the course of the program, you could save a total of $36,300 in real estate taxes over 14 years.
 
YEAR
% EXEMPT
EXEMPTION AMOUNT
(Rehab Portion)
1
100%
3,025
2
100%
3,025
3
100%
3,025
4
100%
3,025
5
100%
3,025
6
100%
3,025
7
100%
3,025
8
100%
3,025
9
100%
3,025
10
100%
3,025
11
80%
2,420
12
60%
1,815
13
40%
1,210
14
20%
605
Total Savings
$ 36,300

EXAMPLE (RESIDENTIAL)
You own a home worth $300,000 that is at least 25 years old. The land is worth $100,000 and the original building is worth $200,000.

During the rehabilitation process, the value of the building increases by 25%, or $50,000. Based on a tax rate of $1.21 per $100 of value, the additional tax on the increase in value is $605. This is the exemption amount that will be used to calculate total taxes due during the program period.

During the initial year in the program, taxes without the exemption are $4,235. With the exemption, taxes are $6,630 – a savings of $605 in the first year.

Assuming the tax rate and assessed value do not change over the course of the program, you could save a total of $4,235 in real estate taxes over 10 years.
 
YEAR
% EXEMPT
EXEMPTION AMOUNT
(Rehab Portion)
1
100%
605
2
100%
605
3
100%
605
4
100%
605
5
100%
605
6
80%
484
7
60%
363
8
40%
242
9
20%
121
10
0%
-
Total Savings
4,235


5 STEPS TO EXEMPTION
To begin your real estate tax savings, follow these five steps toward exemption:
  1. Obtain all necessary building permits before applying for exemption. Contact the Inspections Office at 703-257-8278.
  2. Complete an application form for the Tax Exemption on Revitalized Structures. Submit the application form, copies of all necessary building permits, and the appropriate nonrefundable application fee to the Commissioner of the Revenue. Make checks payable to the City of Manassas.
  3. Upon approval of the application, the Commissioner of the Revenue’s Real Estate Assessment Office will inspect the property to determine the base value. The base value is equal to the assessed value before commencement of any work.
  4. When rehabilitation is complete, submit a written request to the Commissioner of the Revenue for a final inspection. This request must be made prior to November 1 of the calendar year when rehabilitation is complete. Upon final inspection, it will be determined if the property qualifies for a real property tax exemption.
  5. The Commissioner of the Revenue’s Office will determine if the assessed value of the rehabilitated property exceeds the base value by at least 25%. If the property meets all of the program requirements, the exemption will become effective beginning January 1 of the next calendar year.