A financially desperate Albemarle County has dropped the tax hammer on mom and pop landlords countywide.
Several owners of rental property located within the county have contacted The Schilling Show after receiving ominous notification from the Albemarle County Department of Finance, Business Taxation Division that heretofore-unrequested taxes were now due on their properties.
Without a specific citation, the County’s letter references an obscure and apparently previously unimplemented “1973 Albemarle County Code” which “requires individuals or businesses engaged in the rental of income producing properties to be subject to a business license tax based on gross receipts (rent received).”
A perusal of the county’s code yields:
Sec. 8-619 Renting of houses, apartments or commercial property.
Each person, as principal, engaged in the business of renting houses, apartments or commercial property in the county shall be subject to the license tax, and other provisions, set forth herein:
A. Each person engaged in the business of renting houses, apartments or commercial property in the county shall be subject to a license tax of twenty cents ($0.20) for each one hundred dollars ($100.00) of gross receipts from the rental of all commercial establishments, apartment units or dwelling units.
B. For purposes of this chapter, the following definitions shall apply:
- The term “business of renting houses and apartments” means the rental of a building, or portion thereof, designed exclusively for residential occupancy, including one-family, two-family and multiple-family dwellings, but not including hotels, boardinghouses and rooming houses.
- The term “dwelling units” means one or more rooms in a dwelling house or apartment designed for occupancy by one family for living purposes and having cooking facilities.
(3-15-73, § 61; 5-15-75; Ord. 96-11(1), 11-13-96, § 11-71; Code 1988, § 11-71; Ord. 98-A(1), 8-5-98)
State law reference– Va. Code § 58.1-3700.
8-37 Supp. #18, 1-08
Adding insult to injury, in addition to registering for a business license and paying duty on a formerly untaxed activity, the letter indicated that Albemarle County is also requiring landlords to provide them specific information on tenants:
At the beginning of each year, we will be requesting a current tenant listings for all rental property owners as permitted under Title 58.1-3901 of the Code of Virginia. [sic]
A call to the Albemarle County Finance Department confirmed the government’s intent to vigorously enforce this economic assault on landlords and tenants alike, and a county tax staffer said that landlords who have hired professional property managers or firms to oversee their rental properties must still submit the requested paperwork and accompanying taxes.
One property owner, who wishes to remain anonymous for fear of reprisal from the county, has indicated her intention to pass the new tax burden and an associated administrative fee directly to each tenant as a line item on her lease renewals. Others likely will do the same.
Unreferenced in the letter and perhaps uncontemplated by the tax-happy bureaucrats in the county’s finance department, are the costs associated with collecting and accounting for this new tax.
Albemarle County, with its record of frivolous spending; obese public-sector salaries and benefits; and incompetent, self-serving elected officials; is also struggling with housing policy—particularly affordable rental housing. But once again at odds with themselves, the all-Democrat Board of Supervisors will pursue a shakedown that ensures more taxes and higher rental costs for citizens, and of course, greater power for government.
UPDATE 7/7/2016 8:26 AM: Albemarle County is seeking back taxes from landlords for the previous seven years of rental history! Click here to view their “Declaration of Gross Receipts for Multiple Years” form.
How does the Chamber and the BBB and the NFIB attract business to Charlottevsille when businesses are treated this way?
We will reap what we sow.
While I am offended by having to obtain an business license and pay another tax, I am MORE offended by the requirement that you have to provide the taxing authorities with your federal identification number and the names and addresses of your tenants. WHY do they need this information to levy a tax against the Landlord? They collect the information because they can under state law…we need to CHANGE the state law; otherwise the governmental intrusion into our lives will only get worse.
County of Albemarle to its business owners, "Go away; we DON'T WANT YOU!"
I just received one for property owner/property management client addressed to my property management firm's po box as I pay her property taxes…I suspect she is "low hanging fruit" in this effort….word I heard is that there is a new "sheriff" in Finance Dept who wants to go back decades to collect $$$ although form sent to me only goes back to 2009
It’s actually not just about landlords. This form has recently gone out to anyone who reported income from LLCs or sole proprietorships. The liberals running Albemarle County need to all be voted out. It’s all about their tax and spend (i.e. waste) our hard earned money. Shame on you Albemarle County! Revolt citizens of Albemarle!
Va. Code Section 58.1-3703.C.7 prohibits a county from assessing a business license tax on individual rental property unless the county’s ordinance for such tax predates 1/1/1974. Section 1-100 of the county code says we are to cite it as the “Albemarle County Code of 1998.”
While I’m not an attorney, I think a legitimate argument could be made that Albemarle County does not have authority to tax rental property as a business since the current county code is from 1998. I think the General Assembly does not want counties to charge this tax, especially when the local code is updated after 1/1/1974.
Also, don’t forget about AirBnB and the many people who rent a room from homeowners. If the county wants to charge this tax, then it needs to fairly apply it and not go on a search or expedition guessing which homeowners might be renting a room or house. How does the county plan to enforce this rule. Right now, it looks like it will be by voluntary compliance.
Just received my notification. Yikes. This will cost thousands and mostly go to a more bloated bureaucracy. I’m glad I found this article (thanks Rob!) and the comments because, at first, I thought it was something I had been negligent about. The property tax alone is pretty stiff, so this is not a welcome expense… and eventually, all it will do is add to the expense of tenants and consumers… which is all of us.