Income tax, state; tax credit for adaptive repurposing of underutilized structures.
The bill proposes a non-refundable tax credit of 20% of eligible expenses incurred during the conversion process, which may increase to 30% for projects located in at-risk localities. The credit is capped at a maximum of $2.5 million per taxpayer annually, and the total credits available across all taxpayers in a given year is limited to $30 million. Such provisions are expected to incentivize developers to undertake projects that align with community needs for affordable housing while simultaneously addressing the excess of vacant commercial properties due to changing economic conditions.
Senate Bill 1113 introduces provisions for an income tax credit aimed at the adaptive repurposing of underutilized structures into affordable dwelling units in Virginia. The bill expands upon existing tax credit structures by targeting developers who convert non-residential commercial office buildings into residential units, particularly in localities facing economic challenges such as high unemployment or poverty rates. This initiative is designed to stimulate investment in properties that have been neglected and to provide affordable housing options in areas where they are most needed.
Discussions surrounding SB1113 may reveal contention regarding the definition of 'at-risk localities' and the eligibility criteria for developers. Critics may argue that the bill does not sufficiently account for the complexities of local economic conditions or the preservation of historical buildings that could be converted. Moreover, while the intent of the bill is to alleviate housing shortages, there may be concerns about whether tax incentives will lead to genuine affordability or merely benefit developers without producing lasting solutions for low-income residents.