New Henrico program will cap real estate taxes for some seniors, disabled citizens

Henrico County is implementing a real estate tax cap program for homeowners 65 years and older and other homeowners who are 100% permanently and totally disabled.

The Real Estate CAP program (or RECAP) is a cap on the real estate tax for those in Henrico who fit one of those categories and who also are the primary homeowner; have a household income of no more than $105,000; and have a net worth less than $700,000. It’s an extension of the county’s Real Estate Advantage Program (REAP) and will take effect Jan. 1.

The idea to start the program came from Three Chopt District Supervisor Tommy Branin, who was concerned by rising real estate assessments in the county, which can be particularly challenging for homeowners on fixed incomes, he said.

It bothered him that so many Henrico citizens were struggling to stay afloat financially because of those increase, Branin said. (Virginia localities are required to assess properties annually as close to their fair market value as possible, meaning taxes are calculated based on what the house would sell for on the open market.)

“Our board members got a lot of feedback from citizens in the community who were concerned because they were seniors on a fixed income, but they didn’t qualify for REAP [the county’s Real Estate Advantage Program, which provides a tax break for seniors and disabled homeowners],” Henrico Finance Director Shelia Minor  said.

Many home prices have risen substantially in Henrico and nationally in the past two years, Minor said.

“It’s a difficult pill to swallow from a tax perspective if you’re a senior living on retirement,” she said.

When someone is on a fixed income for the rest of his or her life, having expensive repairs on a house can hit hard, Branin said.

“Whether you live comfortably in a middle-class or upper-middle-class house, your whole world can crumble because of something like the market value,” he said.

Branin came up with the idea of freezing people’s taxes but lowering them as the taxes went down, he said.

“I went to the county manager and said, ‘I’ve been looking at this for months and I think it would be a valuable thing for us,’” Branin said. “We had to make sure that legally we could do that, because we’re mandated and controlled by state laws.”

The issue was that localities can only do what is allowed by Virginia law, Minor said. The state code allows for freezing tax increases for seniors, as the county can exceed the difference between a tax bill from the prior year and the amount that’s due to an increase.

“Fast forward, we now call it the RECAP program because we’re not freezing it so much as we’re capping it because we want folks to be able to have the opportunity to go down if their assessments decrease,” Minor said.

This program was agreed upon unanimously by the board, Branin said.

“There’s nothing in the country quite like this, that will actually help benefit people over 65,” Branin said.

Once a person applies for the RECAP program, he or she must meet the criteria as set out by the existing REAP program:

• must be at least 65 years of age or 100% permanently and totally disabled;
• must occupy the sole dwelling of the resident in question;
• must hold the title of the resident;
• must not have a combined total income exceeding $105,000, including Social Security (excluding live-in caretaker incomes);
• the maximum net worth of the household must not exceed $700,00, excluding the dwelling and 10 acres of the land the dwelling sits on;
• applicants applying who share ownership must all apply and must all qualify for RECAP.

If these criteria are met, Henrico County will establish a base amount for a homeowner to pay, according to the taxes they paid the previous year, Minor said.

“If they paid $2,000 in taxes the year before, $2,000 becomes their base,” Minor said. “If their next tax bill is $2,100, they would pay $2,000 instead.”

The existing REAP program has been in place since 1973 and currently relieves up to $3,200 of real estate tax. In 2022, more than 6,000 Henrico households applied for REAP, and the county awarded almost $11 million in tax relief, according to a Community Conversation held Sept. 5 by Henrico Board of Supervisors Vice Chairman and Varina District Supervisor Tyrone Nelson.

“We’re using the same applications and the same staff to administer both programs,” Minor said. “We get the documentation, do all the calculations, and work with you. Our staff will put you in the program that you qualify for.”

County officials do not have a clear sense of exactly how many people the RECAP program will impact but Minor estimates that it will add roughly about 1,000 to 2,000 people, she said.

“Given the net worth cap, we might have a total of 7,500 in total who would qualify for one program or the other,” Minor said. “But that’s just an estimate, we don’t have access to that kind of demographic data.”

Applications for the RECAP program open next month, Branin said.

“In Henrico County, we have a substantial 65 and older population, which is growing every year,” Branin said. “So, a program like this puts the people of Henrico County in a better position.”