Quarterly: Summer 2004 - GWCAR - Greater Washington Commercial Association of REALTORS

CBQ >> Summer 2004 Issue

Va. Marathon Session Ends With Mixed Results

Virginia Legislative Wrap-Up

A historic Virginia General Assembly session that ran nearly twice its normal length is finally over.

While the outcome of the 2004 Session was generally positive, the ultimate results of the wickedly partisan 2004 session will very likely be debated for some time to come.

Almost as important as the bills that were enacted into law are the measures that have been set for study in anticipation of the 2005 Session.

For example, House Joint Resolution 176 authorized a study of the impact of taxing Internet sales and catalog sales. House Joint Resolution 172 authorized a study of the effect of exchanging a broadly applied sales tax for the current income tax.

In the Senate, Resolution 64 authorized an examination of the future of manufacturing in Virginia.

The new state budget includes significant new spending for education at all levels, delayed pay raises for state employees and a major infusion of cash into the state's reserve fund.

ACTIONS AFFECTING COMMERCIAL REAL ESTATE

Recordation Tax Increase -- Effective September 1, the Virginia state recordation tax will increase by 10 cents, raising the rate to $.25 per $100. [The original proposed rate was $.45.] Under the state law, local jurisdictions are allowed to add a local recordation tax that is up to 1/3 that of the state levy. The recordation fee is levied on both the purchase price and the mortgage amount (grantee and grantor taxes). The recordation tax was passed as part of the Virginia Assembly's final budget compromise, but we note that the recordation tax rate had not been raised since 1948.

Eminent Domain -- The act provides that, in the event of a downzoning of a property located in a conservation or redevelopment plan without the expressed consent of the property owner, the date of valuation shall be the date of adoption of the conservation or redevelopment plan.

New Document Fee -- Some local governments have begun charging a $10 document fee on certificates of satisfaction and refinancings. After September 11, the Governor imposed a $10 document fee on recordings to fund Virginia's Homeland Security activities. Local jurisdictions have recently begun placing that fee on certificates of satisfaction.

OTHER LEGISLATIVE ACTIONS

Sales Tax -- The final state budget increased sales taxes from 4.5 to 5 percent on goods (Virginia continues to have one of the lowest retail sales taxes in the nation, however) and reduced sales taxes on groceries from 4.5 to 2.5 percent. The cigarette tax was increased from 2.5 cents to 30 cents over a two year phase-in period.

Credit Rating -- Moody's Investor Services in New York announced that Virginia has been moved off the credit-watch list and that the state's AAA rating is secure.

Age Deduction -- Being evident that Virginia could not continue exempting $24,000 of senior couple's income (along with Social Security) from state income tax without regard to need, future recipients will find that the age deduction will be subject to means-testing.

Car tax payments to localities will be capped at $950 million.