RICHMOND, Va. (WRIC) — Many Richmond homeowners will see their tax bills go up next year as property values across the city have increased by an average of 13% for 2023.
In response, two City Councilmembers are proposing a reduction of Richmond’s real estate tax rate. But questions remain about whether the effort has enough support with another proposal calling for it to stay the same.
According to the Richmond assessor’s office, the average assessed value of a home in the city increased by 13.04% for 2023.
With the city’s tax rate at $1.20 per $100 of assessed value, an owner of property assessed at $400,000 would have an annual tax bill of $4,800. With the 13% jump, the owner would pay $624 more than the year before.
“The city of Richmond is still growing,” city assessor Richie McKeithen told 8News. “Its real estate market is still going at a robust pace.”
McKeithen said several factors have led to the increase in Richmond’s property values, including low inventory with more homebuyers, rising rents pushing people to buy homes and low-interest rates for mortgages in 2020 and 2021.
He added that more people are seeing the city as an affordable option compared to bigger markets, such as New York and Washington D.C., and they aren’t restricted when looking for a home due to more remote work options.
If the total property tax revenue exceeds the previous year by 1% because of an increase in real estate assessments, the tax rate would drop to $1.071 unless a change is approved by the council. Richmond’s City Council is expected to consider two proposals later this year that would establish the rate for the tax year starting in 2023.
Councilmembers Kristen Nye and Reva Trammell have introduced legislation that would drop Richmond’s real estate tax rate by 4 cents. Richmond City Council President Cynthia Newbille has proposed a measure to keep the tax rate at $1.20.
According to city documents attached to both proposals, a penny of the tax rate generates $3.5 million in total revenue, meaning the proposal from Nye and Trammell would cut revenue by an estimated $14 million.
It’s unclear whether a cut in the rate would pass, but Trammell said she is considering proposing a 10-cent reduction. Last year, the City Council voted against Trammell’s effort to lower the rate to $1.135.
City Councilmembers discussed the real estate tax rate when the measures were introduced during the council’s Sept. 12 meeting.
“I think this is one of the biggest debates we have before us right now,” 1st District Councilmember Andreas Addison said. “I think there needs to be an evaluation on the fact that 3,000 homes were sold last year across the city and that creates a 13% increase in our assessed value of our properties.”
“And that’s the problem,” he continued. “3,000 people sold their homes and the other 97% of people that own homes in the city had to pay for that increased value as if their homes were improved with new kitchens and bathrooms and additions and most of them were not.”
Michael Jones, Richmond’s 9th District Councilmember, said he proposed a reduction in the city’s budget but that it was voted down. Katherine Jordan, the 2nd District Councilmember, asked whether the city had other options to provide relief to property owners who need assistance.
Lincoln Saunders, Richmond’s chief administrative officer, told the council that the city is looking at exploring potential paths to provide help to those “feeling the pinch from higher assessments.”
“Our challenge now as a city, I’ve been saying this for the last couple of years, is to protect our residents from higher tax bills,” McKeithen said. “Your assessment is one thing, but what you actually pay can be another.”
McKeithen said the ultimate goal is to expand the availability of tax relief to long-term residents who need assistance, a move that would have to come from the Virginia General Assembly.
Per Virginia law, only residents who are 65 and older or disabled who made less than $60,000 the previous tax year and have less than $350,000 in assets can get assistance from the city.
Richmond homeowners can file an appeal with the city assessor’s office until Sept. 30 to challenge their real estate tax assessment.
The proposed ordinances will be heard in the city’s Finance and Economic Development standing committee on Oct. 20.