COUNTY OF ALBEMARLE
Real Estate Tax Exemption for Certain Elderly and Disabled Persons
Increasing Acreage to be Excluded in Determining Net Combined Financial Worth
Tucker, White, Davis, Herrick, Wiggans, Correa
LEGAL REVIEW: Yes
November 02, 2005
ACTION: INFORMATION: X
The Real Estate Tax Exemption for Certain Elderly and Disabled Persons program provides a real estate tax exemption for eligible elderly or disabled persons who are subject to a real estate tax burden that is extraordinary in relation to their income and financial worth. The criteria used in determining eligibility for the program is based on age or disability, income, and net combined financial worth. The qualifying matrix used by the County exempts varying percentages of real estate tax, depending on ranges of income and net worth, from 20.0% to 100.0%. The formula used in determining net combined financial worth excludes the value of an individual’s home and the land, not exceeding one acre, upon which the home is situated. The current cost to the County of the program is approximately $284,000 annually.
The 2004 General Assembly amended Virginia’s Code § 58-1-3211 to allow localities to exclude the value of up to ten acres of land in the net worth calculation. Prior to 2004, only the value of one acre of land could be excluded. This report discusses the impact on Albemarle County of increasing the amount of acreage to be excluded. It includes a survey of other counties in the state concerning their experience with increasing the amount of land to be excluded and an analysis of the financial impact on the County if the excluded amount of land is increased.
4.2 Fund County services in a fair, efficient manner and provide needed County public facilities and infrastructure.
Staff surveyed a total of nineteen counties to review whether or not they had amended their program based on the new state-allowed maximum exclusion. Of the counties surveyed, four (21%) have raised the amount of excluded acreage to exceed one acre. Of those localities, two have raised the acreage from 1.0 to up to 5.0 acres and two have raised the acreage up to 10.0 acres. Staff discussed with the four counties that raised their acreage exclusion if they had determined the financial impact of this action. Two of the four counties (Gloucester and Prince George) stated that they anticipated minimal financial impact on the counties due to the increase. The third (Pulaski) did not estimate the impact and has seen no impact to-date. The fourth (Henrico) estimated a $20,000 impact based on assumptions derived using the existing program.
Albemarle currently has 327 participants in the program. These individuals own a total of 690 acres or an average of just over 2 acres each. Based on existing program participants, staff estimates the cost to Albemarle County of increasing exempt acreage from 1.0 acres to 5.0 acres is approximately $8,000. The cost to the County of increasing the exempt acreage from 1.0 acres to 10.0 acres is approximately $10,000.
It is important to note that the figures indicated above are the financial impact on the County resulting from the change on existing participants due to greater tax exemptions computed on the sliding scale used to compute the amount of tax to be paid. Staff is unable to calculate, based on lack of information, the number of new participants who would qualify for the program because of an increased exclusion of land value used to calculate their net worth and the impact that these new participants might have on the overall cost of the program.
This report is for information only. However, if the Board wants to increase the amount of acreage excluded from the calculation of net worth for purposes of the real estate tax exemption program, the definition of “Net Combined Financial Worth” in the County Code must be amended to set the new amount of acreage to be excluded.
To be effective for tax year 2006, staff would recommend that the ordinance necessary to amend the County Code be advertised for public hearing on December 7, 2005.
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