VA HB1258

Creates a nonrefundable income tax credit for owners of qualified rental properties who limit rent increases to no more than the Consumer Price Index when experiencing property tax increases that exceed standard assessment limitations

Credit phases down over three years: 50% of the qualifying tax increase in year one, 30% in year two, and 10% in year three, with a program sunset date of January 1, 2031

Eligible properties must be rented for residential purposes for at least 24 consecutive months, have no outstanding building code violations over 90 days, and excludes owner-occupied properties with fewer than four units and properties receiving affordable housing subsidies

Phases in eligibility by property size: properties with 10+ units starting January 1, 2026; 3+ units starting January 1, 2027; all qualified properties starting January 1, 2028

Caps total credits at $5 million per taxable year allocated first-come, first-served, requires Department of Taxation audits of at least 5% of claims, and imposes a Class 3 misdemeanor for knowingly false applications