Homeowners would receive amount equal to 2 cents per $100 of home’s assessed value
For the second consecutive year, Henrico County is proposing to give the owners of residential and business properties a credit on their real estate taxes to help offset rising values.
Property owners would receive an amount equal to 2 cents per $100 of their real estate’s taxable value for 2023. For example, a single-family home with the average assessed value of $367,000 would generate a credit of $73.40. ($367,000/100 x .02=$73.40)
In adopting a similar, 2-cents-per-$100 credit in 2022, Henrico became the first locality in Virginia to return surplus real estate taxes to property owners under a 2005 state law. The proposed credit, like last year’s, would help property owners manage the impact of sharply rising real estate values, which lead to increased assessments. Henrico’s 2023 assessment notices have been mailed, and the updated values are reflected online.
“As we said last year, returning these surplus funds to our taxpayers is the right thing to do,” County Manager John A. Vithoulkas said. “These revenues were not anticipated in our budget, and their return will not compromise any programs or services. This credit will put extra dollars in our residents’ pockets for everyday expenses, like gasoline or groceries. It’s another example of our commitment to fiscal prudence, and it sends a powerful message on this Valentine’s Day – Henrico is a county with heart.”
Property values have continued to rise across the region due to a sustained demand for and a limited supply of housing. The value of Henrico’s residential tax base, excluding new construction, increased by 13.6% in 2022. Virginia law requires local real estate assessments to reflect 100% of a property’s fair market value.
The average value of a single-family home increased by 13.9%, from $322,200 in 2022 to $367,000 in 2023. At those values, the owner would face an increase in real estate taxes of $381 without tax relief. Under the county’s proposal, the owner would receive a tax credit of $73.40.
If approved, the tax credit would return to property owners $11.2 million that otherwise would go to the county’s general fund. Individual credits of $30 or more would be paid by checks issued in September, just before the mailing of 2023’s second installment real estate tax bills. Amounts less than $30 would be credited directly on those bills.
For property owners who owe delinquent taxes, the credit would be applied to the outstanding balance and to any future bills if the credit exceeds the amount due.
Property owners receiving a credit who pay their taxes through an escrow account – for example, as part of their mortgage – likely would not see their credit reflected until accounts are reconciled later in the year.
The Board of Supervisors will consider the credit this spring during its review of a proposed budget for fiscal 2023-24. The budget, which will be formally presented March 14, will be balanced assuming a real estate tax rate of 85 cents per $100 of assessed value.
Officials continue to closely monitor the housing market and look for signs that recent increases in mortgage rates may lead to a softening of demand that could impact home values and assessments in the future.