AGING AND VIRGINIA TAX CREDITS
Are You Aging or Responsible for Someone Who Is?
There is Tax Relief from the Commonwealth of Virginia
There’s no question about it … we have an increasingly aging population in the U.S. and Virginia residents are no exception. More than 40 million Americans are now age 65+, nearly 15% of the population … which will reach 20% by 2030 when the last Baby Boomers turn 65.
Virginians over the age of 60 will register more than 25 percent of the Commonwealth’s population by the year 2025. For these seniors, their families and friends, the focus on accessible housing is increasingly important.
Notably, according to the MetLife Mature Marketing Institute, ninety-one percent of folks age 50 – 65 responded that they want to live in their own homes in retirement. That statistic is mirrored by the American Association of Retired Persons (AARP) which reports that nearly ninety percent of seniors want to stay in their own homes as they age, often referred to as “aging in place.”
Living under one’s own rules is a key reason seniors cite for aging in place. To facilitate that objective, seniors have identified housing features that are especially important in their later years as they begin to experience impaired eyesight, imbalance, reduced flexibility and diminished mobility. According to the AARP those “senior living assists” and their relative importance include:
- Safety features such as non-slip floor surfaces (80 percent)
- Bathroom aides such as grab bars (79 percent)
- A personal alert system that allows people to call for help in emergencies (79 percent)
- Entrance without steps (77 percent)
- Wider doorways (65 percent)
- Lever-handled doorknobs (54 percent)
- Higher electrical outlets (46 percent)
- Lower electrical switches (38 percent)
Most of these features do not currently exist in most seniors’ homes … and are expensive to install or upgrade. Fortunately, there is tax relief available to help Virginians.
Virginia Livable Homes Tax Credit (LHTC)
The Commonwealth of Virginia has initiated and supports the Livable Homes Tax Credit (LHTC) designed to improve accessibility and universal visitability in Virginia’s residential units. The objective is to financially assist seniors to install or improve housing features to help them age in place as health issues become more restrictive.
So let’s start with a brief lesson on “What are tax credits?” The best way to describe tax credits is in contrast to what most taxpayers understand … tax deductions. Tax deductions reduce the amount of your income subject to tax. Tax credits directly reduce the tax itself.
For example, assume you or your business spends $5,000 that results in a tax deduction. That will reduce your taxable income by $5,000. In a 25% tax bracket, you would save $1,250 in taxes.
Now compare that with a $5,000 tax credit. That amount is subtracted from the amount of tax owed as opposed to an offset to income … as is the case with a tax deduction. Result: Your tax bill is reduced by the full $5,000 tax credit!
Taxpayers, businesses and individuals, find tax credits trump tax deductions every time in saving tax dollars as an offset to your Virginia tax liability.
Livable Homes Tax Credit (LHTC)
The LHTC provides state tax credits for the purchase of new units or the retrofitting of existing housing units. Tax credits are available for up to $5,000 for the purchase/construction of a new accessible residence and up to 50 percent for the cost of retrofitting existing units, not to exceed $5,000.
Credits that exceed eligible individuals’ or licensed contractor’s tax liability may be carried forward for up to seven years.
Yes, there are other conditions and requirements. Click Click here to research.
Summary
As the foregoing illustrates, there is much to be gained by Virginia taxpayers who qualify for the LHTC. Likewise, there is much to know and do to meet the requirements.
The above presentation is meant as an overview only. Your best bet … give us a call and we’ll quickly help you determine if you qualify and for how much.
