Disabled Vets May Be Exempt From Property Taxes

Disabled vets living in Virginia may not have to pay taxes on their homes

On 1 January 2011, Virginia’s Constitution was amended to provide for full tax exemption on disabled veterans’ primary residences.  That’s right, disabled vets can be exempt from property taxes on their homes. Their surviving spouses are also eligible for this benefit.  A new law went into effect on 1 July 2023 that makes this even better.

First, let’s review the Constitution’s amendment.  The law applies to real property.  “Real Property” means homes and land, essentially.  In particular, the law applies to primary residences and up to 1 acre of land owned by veterans with a 100% disability rating from the Veterans Administration and their surviving non-remarried spouses.  Here’s the exact language provided by Virginia’s Department of Veteran Services, the state agency overseeing this program.

Localities [e.g., counties] must exempt from taxation:

  • The dwelling that is the principal residence of the qualifying veteran and up to one acre of land (or more if an exemption for greater than one acre is provided to elderly and handicapped persons).
  • Owned by a Veteran with a 100% service-connected, permanent and total disability, who is/was alive on or after January 1, 2011.
  • Or the surviving spouse of such veterans.
  • Or the surviving spouse of any member of the United States armed forces who was killed in action.
  • Veterans rated at less than 100% but who the VA rates at 100% due to individual unemployability AND are rated “permanent and total” qualify for the exemption.

The exemption shall remain provided that the disabled veteran or surviving spouse:

  • Occupies the real property as their principal place of residence
  • For surviving spouses, provided they do not remarry
  • As of July 1, 2019, surviving spouses of KIA/DOW and 100% disabled veterans are allowed to move and take the exemption with them.

For surviving spouses of active duty KIA/DOW – the service member may have died in combat prior to 2015 when the constitutional amendment was enacted, however, they cannot claim the exemption prior to 2015.

So, what is new as of July 1, 2023?  A change that will help home buyers who qualify for this tax exemption even more.  Since January 2011, eligible veterans apply for tax exemptions on their primary residences they already own.  Makes sense, right?  It doesn’t seem to make any sense to apply for a tax exemption on property one doesn’t own.  Well, this changed.  Starting on July 1, 2023, veterans eligible for this tax exemption are permitted to submit tax exemption applications on homes they are about to buy.  Tax exempt applications can be submitted as soon as the veteran has a ratified contract on a new home.  (A “ratified contract” is the Residential Sales Contract signed by buyers and sellers, and upon signing.  The actual possession of the home by the buyer usually occurs about a month later after the inspections, loan application, and other settlement activities are completed.)

What is the benefit to home buyers this new law provides.  There are two in particular, and there may be more for us to discover after we see how this new law plays out.  One, veterans buying a home will know the extent of their cost savings sooner.  This can help them plan their future right-around-the-corner budget more effectively.  And, two, lenders will know that their veteran borrower will certainly receive the tax exemption.  Lenders consider future debt when deciding on home loan potential, so knowing with certainty that a borrower will have less tax debt can aid in a better loan application outcome.  Good stuff!

More information is available from the Virginia Department of Veteran Services at https://www.dvs.virginia.gov/benefits/real-estate-tax-exemption