Property tax
Property tax is a yearly fee homeowners pay based on the assessed value of their property. Like other taxes, the amount you pay can vary depending on where you live and how much your home is worth.
Virginia’s effective property tax rate on owner-occupied housing value is typically 0.78%. Your taxes are prorated to the day of sale when you sell your home, meaning you’ll only pay taxes for the days of the fiscal year that you owned your home.
The Virginia Department of Taxation can provide more information about taxes specific to your city or town here.
Inheritance tax
In some states, if you inherit a home, you may owe taxes. Virginia, however, is not one of these states. However, you will be responsible for any property taxes owed on the home. It’s also possible that a lien might exist on the property if the previous owner was not up to date on their taxes, which you would be responsible for.
If you decide to sell the inherited home, the concept of a “stepped-up basis” comes into play. The stepped-up basis means the home’s cost basis for tax purposes is set at its fair market value on the date you inherited it, not what the original owner paid. This can significantly reduce capital gains tax if you sell the home soon after inheriting it. Capital gains tax is only applied to the portion of the profit above that stepped-up value.
»Learn more: Want to know exactly how much you’ll walk away with from your home sale? Use our Virginia closing cost calculator to get a personalized estimate of your selling expenses and see your potential proceeds after closing.
Other selling expenses you might encounter in Virginia
- Title fees: Title fees typically include a title search and title insurance. Title insurance helps protect both the buyer and lender from potential problems with a home’s title. These issues could include things like forged documents, a previously unknown will, or restrictions on the deed that weren’t discovered during the title search. Who pays the title insurance can vary by state. In Virginia, this typically falls to the seller.
- Settlement fees: Also called escrow fees, settlement fees are usually 1% of the home sale value. This lump sum is charged by the title company, escrow company, or attorney handling the closing process. These fees typically cover the costs of preparing final documents, completing the transaction, and distributing payments to the appropriate parties. The exact amount and who pays these fees can vary depending on the agreement between the buyer and seller.
- Agent commissions: Historically, sellers paid a total commission of around 5% to 6% of the home’s sale price, which was usually split between the listing agent and the buyer’s agent. But after the National Association of Realtors settlement changed how agent fees are handled, buyers now work directly with their agents to negotiate their own commission costs. For sellers, this typically means paying only their listing agent’s commission, which is often around 2.5% to 3% of the sale price, depending on the agreement.
How to prepare for Virginia real estate taxes
Real estate taxes don’t need to be intimidating, and they don’t need to catch you off guard. There are several ways you can get an idea of what you’ll owe before the time comes to sell your home, and HomeLight is here to help. Here are some final steps to consider:
- Know your home’s value: Use an online automated valuation model (AVM) tool like HomeLight’s free Home Value Estimator. Having a ballpark idea of what your home might be worth can help you calculate the potential capital gains from the home sale.
- Save the right documents: Know what tax documents you will need to sell before doing so. Talk with a tax professional about the federal and state forms you may need in Virginia, as well as any tax breaks or exemptions you might qualify for.
- Find a top agent: An experienced real estate agent can guide you through the home sale process. They can help you figure out what you may owe in taxes and keep more money in your pocket. Our data shows that the top 5% of real estate agents across the U.S. sell homes for 10% more than the average real estate agent.
HomeLight makes it easy to find top real estate agents in your market. From our Agent Match tool to innovative programs like Simple Sale and Buy Before You Sell, we have you covered when it comes to selling your home, ensuring every transaction is simple, certain, and satisfying.
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Editor’s note: This post is for educational purposes only, not financial, tax, or legal advice. HomeLight recommends consulting an advisor for guidance tailored to your situation.
