Rehabilitated Real Estate Program

The Council of the City of Manassas has approved an ordinance enacting a tax exemption for property that is substantially repaired, rehabilitated, or replaced. The exemption program was adopted to encourage renovation and revitalization of under utilized, 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.

Program Eligibility and Requirements:

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:

• An application for “Tax Abatement 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 abatement 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 abatement 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 abatement in the following calendar year.

Program Benefits

Qualifying property owners shall receive an abatement 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 abatement of the increase over a specified time period, with the abatement being phased out over a few years.

• The tax abatement will transfer with the property.
• Delinquent taxes must be paid to participate.

Additional Information:

• No abatement will be granted on land value.
• All work done must conform to existing City regulations.
• The amount of tax abatement 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 all other type properties.
• Amenities such as swimming pools generally will not qualify for the program.

TAX ABATEMENT SCHEDULE

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 $1.015 per $100 of value, the additional tax on the increase in value is $2,537.50. This is the abatement amount that will be used to calculate total taxes due during the program period.

During the initial year in the programs, taxes without the abatement are $17,762.50. With the abatement, taxes are $15,225 – a savings of $2,537.50 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 $30,450 in real estate taxes over 14 years.

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 $1.015 per $100 of value, the additional tax on the increase in value is $507.50. This is the abatement amount that will be used to calculate total taxes due during the program period.

During the initial year in the program, taxes without the abatement are $3,552.50. With the abatement, taxes are $3,045 – a savings of $507.50 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 $3,552.50 in real estate taxes over 10 years.

5 STEPS TO EXEMPTION

To begin your real estate tax savings, follow these 5 steps toward exemption

1. Obtain all necessary building permits before applying for exemption. Contact the Inspections Office at 703-257-8231.
2. Complete an application form for the Tax Abatement of 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.