• As of March 1, 2026, FinCEN’s new Residential Real Estate Rule requires federal reporting on certain non-financed (including “all-cash”) transfers of residential property to legal entities or trusts — including LLCs, corporations, partnerships, and both revocable and irrevocable trusts.
• The rule applies nationwide with no minimum purchase price, meaning even gift transfers and routine internal restructurings may trigger a reporting obligation if the transaction involves a legal entity or trust and lacks traditional institutional financing.
• Virginia property owners, real estate investors, and anyone using a trust or LLC to hold residential real estate should consult with a qualified real estate attorney before closing to ensure compliance and avoid potential penalties, including fines of up to $286,184 for willful violations.

What Is FinCEN’s New Residential Real Estate Rule?

The Financial Crimes Enforcement Network — commonly known as FinCEN — is a bureau within the U.S. Department of the Treasury responsible for safeguarding the financial system from illicit activity. On March 1, 2026, FinCEN’s Residential Real Estate Rule officially took effect, establishing new federal reporting requirements for certain residential real estate transactions across the United States.

The rule requires designated real estate professionals involved in closings and settlements to submit a “Real Estate Report” to FinCEN when a residential property is transferred to a legal entity or trust through a non-financed transaction. The stated purpose of this rule is to increase transparency in the residential real estate market and to combat money laundering through shell companies and opaque ownership structures.

This rule replaces FinCEN’s previous Geographic Targeting Orders, which imposed similar reporting obligations only in certain high-cost metropolitan areas. The new rule is permanent, nationwide, and significantly broader in scope.

Why This Rule Matters for Virginia Property Owners

Virginia and Virginia Beach have consistently ranked as one of the most active real estate markets on the East Coast. With a thriving military community, a strong investor presence, and growing demand for residential property, many transactions in this market involve the very structures this rule targets — LLCs used by real estate investors, trusts used for estate planning, and all-cash purchases by entities seeking to streamline the acquisition process.

If you own residential property through an LLC, are transferring a home into a trust as part of your estate plan, or are purchasing investment property without traditional bank financing, this rule likely applies to you.

Understanding what triggers a reporting obligation — and what does not — is essential for avoiding unnecessary delays at closing and potential federal penalties.

What Transactions Trigger the Reporting Requirement?

A transaction is subject to FinCEN’s reporting requirement when all three of the following conditions are present:

1. The property is residential real estate.

This includes single-family homes, townhouses, condominiums, cooperatives, and buildings designed for occupancy by one to four families. It also includes vacant land where the buyer intends to build a residence for one to four families. These properties are covered regardless of whether there is a commercial use of the same building — for example, a residence located above a storefront.

2. The buyer is a legal entity or trust.

A “transferee entity” under the rule includes corporations, LLCs, partnerships, and other non-individual legal structures. A “transferee trust” includes any trust arrangement — whether revocable or irrevocable — where assets are placed under the control of a trustee for the benefit of one or more beneficiaries. Notably, the rule applies regardless of where the entity or trust is incorporated or located. The determining factor is the location of the property, not the location of the buyer.

3. The transaction is non-financed.

A transaction is considered “non-financed” if it does not involve an extension of credit from a financial institution that is subject to both anti-money laundering (AML) program requirements and suspicious activity reporting (SAR) obligations. This means traditional bank mortgages from regulated lenders like banks, credit unions, and mortgage companies will generally exempt a transaction from reporting. However, transactions funded through hard money lenders, private financing, seller financing, or outright cash are considered non-financed and are subject to reporting.

It is critical to understand that there is no minimum purchase price threshold. A transfer for $1 or a gift of property for no consideration can trigger the reporting requirement, provided the other conditions are met.

What Transactions Are Exempt?

FinCEN has established several specific exemptions. The following types of transfers are not subject to reporting:

• Transfers that occur as a result of death, including those made pursuant to a will, the terms of a trust, intestate succession, surviving joint tenancy, or transfer-on-death deeds.
• Transfers incident to divorce or the dissolution of a marriage or civil union.
• Transfers made to a bankruptcy estate.
• Transfers supervised by a court in the United States.
• Transfers of an easement.
• Transfers for no consideration made by an individual (alone or with their spouse) to a trust where that individual, their spouse, or both are the settlors or grantors of the trust.
• Transfers to a qualified intermediary for purposes of a like-kind exchange under Section 1031 of the Internal Revenue Code.

The exemption for transfers to a grantor’s own trust is particularly relevant for estate planning purposes. If a married couple transfers their personal residence into a revocable living trust that they established, and no payment is exchanged, the transfer is not reportable. However, if a third party transfers property into a trust, or if the trust is purchasing new property with non-institutional financing, the transaction may well be reportable.

Who Is Responsible for Filing the Report?

The reporting obligation does not fall on the buyer or seller directly. Instead, FinCEN has established a “reporting cascade” — a prioritized list of real estate professionals, one of whom will be designated as the “reporting person” for each transaction.

The cascade, in order of priority, is:

1. The person listed as the closing or settlement agent on the settlement statement.
2. The person that prepares the closing or settlement statement.
3. The person that files the deed with the recordation office.
4. The person that underwrites an owner’s title insurance policy for the buyer.
5. The person that disburses the greatest amount of funds in connection with the transfer.
6. The person that provides an evaluation of the status of the title.
7. The person that prepares the deed or other instrument of transfer.

In Virginia, where attorneys frequently serve as settlement agents and handle closings directly, the reporting obligation will often fall on the closing attorney or the title company. Parties involved in the transaction may also enter into a written “designation agreement” to assign the reporting responsibility to another qualified professional in the cascade.

Real estate agents, acting solely in their capacity as agents, are generally not considered reporting persons. However, if a real estate agent performs any of the functions listed in the cascade — such as acting as the settlement agent — they may be subject to the reporting obligation.

What Information Must Be Reported?

The Real Estate Report submitted to FinCEN is comprehensive. It requires the reporting person to disclose:

• The property address and legal description.
• Full identifying information about the transferee entity or trust, including its legal name, principal place of business, and tax identification number.
• The beneficial owners of the entity or trust — meaning any individuals who exercise substantial control over the entity or who own at least 25% of its ownership interests. For trusts, this includes trustees, grantors with revocation rights, and beneficiaries with the right to demand distributions of substantially all trust assets.
• Personal identifying information for each beneficial owner, including full legal name, date of birth, residential address, citizenship, and taxpayer identification number.
• Information about the individuals who signed closing documents on behalf of the entity or trust.
• The total consideration paid and the method of payment, including account information if funds were disbursed from a financial institution.
• Information about the seller (transferor).

Reports must be filed electronically through FinCEN’s BSA E-Filing System. The filing deadline is the last day of the month following the month in which closing occurred, or 30 calendar days after closing — whichever is later. This provides reporting persons with approximately 30 to 60 days to file.

Importantly, the information reported to FinCEN is not publicly accessible. Real Estate Reports are maintained in a secure federal database alongside other Bank Secrecy Act filings and are accessible only to authorized government officials. They are also exempt from disclosure under the Freedom of Information Act.

What Are the Penalties for Noncompliance?

FinCEN takes compliance seriously, and the penalties for failing to meet reporting obligations are substantial.

• Negligent violations may result in a civil penalty of up to $1,430 per violation, with additional penalties of up to $111,308 for a pattern of negligent activity.
• Willful violations may result in civil penalties of up to $286,184 per violation.
• Criminal penalties for willful violations can include imprisonment of up to five years, a fine of up to $250,000, or both.

It is also important to note that reporting persons cannot file incomplete reports. If a party to the transaction refuses to provide the required information, the reporting person faces a difficult choice — they may need to decline to perform the function that triggers the reporting obligation rather than risk filing a deficient report.

How This Affects Estate Planning in Virginia

For individuals and families in Virginia Beach who use trusts as part of their estate plans, this rule introduces a new layer of consideration.

Transferring a personal residence into a revocable living trust that you and your spouse created is generally exempt — provided no consideration changes hands and you are the grantors of the trust. This is a common and routine estate planning maneuver that should remain unaffected by the new rule.

However, more complex trust arrangements may trigger reporting. For example, if an irrevocable trust is purchasing new residential property with funds that do not come from a regulated lender, the transaction is likely reportable. The same is true if a family member transfers property into a trust where they are not the grantor, or if an existing trust is restructured in a way that involves the transfer of real estate.

Individuals who hold residential property in a trust should review their current holdings and future plans with an attorney who understands both estate planning and the new FinCEN requirements.

How This Affects Real Estate Investors in Virginia 

Real estate investors who acquire properties through LLCs or other entity structures are among the most directly affected by this rule. The practice of using a single-purpose LLC to hold each investment property — a common and entirely legitimate asset protection strategy — will now require FinCEN reporting for every non-financed acquisition.

Investors should be prepared for:

• Additional documentation requirements at closing. Beneficial ownership information for the purchasing entity will need to be collected and verified before the closing can proceed.
• Longer lead times before settlement. Gathering the required information — particularly for multi-member LLCs or entities with complex ownership structures — may add time to the pre-closing process.
• Greater scrutiny of private financing arrangements. Transactions funded by hard money lenders or through seller financing are classified as non-financed under the rule and are therefore reportable.

None of this should discourage the use of LLCs or trusts for legitimate business and asset protection purposes. These structures continue to offer significant legal and financial benefits. However, investors and their advisors must now account for federal reporting as a standard part of the transaction workflow.

Practical Steps to Prepare

Whether you are buying, selling, or advising on a residential real estate transaction in Virginia Beach, the following steps will help ensure compliance:

For Buyers Using an Entity or Trust: Gather your entity’s formation documents, operating agreement, and beneficial ownership information well in advance of closing. Be prepared to provide names, dates of birth, addresses, and taxpayer identification numbers for all individuals with substantial control or ownership interests. Early preparation prevents last-minute delays.

For Sellers: While the primary reporting burden falls on the buyer’s side, seller information is also required on the Real Estate Report. Ensure your identifying information is readily available and accurate.

For Real Estate Agents and Brokers: Flag any transaction involving an entity or trust buyer as early as possible. While you may not be the reporting person, proactively communicating with the closing attorney or title company about the FinCEN requirements will help keep the transaction on schedule.

For Attorneys and Settlement Agents: Review your intake processes to ensure you can reliably identify reportable transfers. Establish procedures for collecting and certifying beneficial ownership information. Consider incorporating FinCEN compliance language into engagement letters and closing documents. Familiarize yourself with the BSA E-Filing System and create your filing account before your first reportable transaction.

Frequently Asked Questions

Does this rule apply to me if I am buying a home as an individual?

No. The reporting requirement applies only to transfers where the buyer is a legal entity (such as an LLC or corporation) or a trust. Transfers directly to one or more individuals are not subject to reporting.

Does the purchase price matter?

No. There is no minimum purchase price or property value threshold. Any non-financed transfer of residential real estate to an entity or trust is potentially reportable, regardless of the amount of consideration involved.

I am transferring my home into my own revocable living trust. Is this reportable?

Generally, no. Transfers for no consideration made by an individual (alone or with their spouse) to a trust where that individual or their spouse is the grantor are exempt from reporting. However, the specific facts of your arrangement should be reviewed by a qualified attorney.

Are reports filed under this rule available to the public?

No. Real Estate Reports are stored in a secure federal database and are accessible only to authorized government officials. They are not available through the Freedom of Information Act.

What if my LLC is financing the purchase through a traditional bank mortgage?

If the transaction involves an extension of credit from a financial institution that is subject to anti-money laundering program requirements and suspicious activity reporting obligations — such as a bank, credit union, or regulated mortgage company — the transaction is generally not reportable. The rule targets non-financed transfers specifically.

I closed on a property before March 1, 2026. Do I need to file a report?

No. The reporting requirement applies only to transactions that close on or after March 1, 2026. Transactions that closed before that date are not subject to reporting, even if they would have met the criteria.

Who actually files the report — me or my attorney?

The filing responsibility falls on the designated “reporting person” as determined by FinCEN’s reporting cascade. In most Virginia transactions where a settlement attorney or title company is involved, one of those parties will be the reporting person. Buyers and sellers do not file the report themselves unless they are also performing one of the functions listed in the reporting cascade.

What happens if the buyer refuses to provide the required information?

The reporting person cannot file an incomplete report. If the necessary information cannot be obtained, the reporting person may need to decline to proceed with the transaction. Failure to file a complete report can result in civil and criminal penalties.

How Pittman & Associates Can Help

The new FinCEN Residential Real Estate Rule adds complexity to transactions that were once considered straightforward. Whether you are purchasing investment property through an LLC, transferring a family home into a trust, or advising clients on the implications of this new federal requirement, having experienced legal counsel is essential.

At Pittman & Associates, we serve Virginia Beach and Eastern Virginia with focused legal services in real estate law, business law, and estate planning. Our team can help you understand how the new FinCEN rule applies to your specific situation, ensure your transactions remain compliant, and structure your entity or trust arrangements with these reporting requirements in mind.

If you have questions about the Residential Real Estate Rule or need assistance with an upcoming transaction, contact our office to schedule a consultation.

Disclaimer: This article is provided for informational purposes only and does not constitute legal advice. The information presented reflects the FinCEN Residential Real Estate Rule as of its effective date of March 1, 2026. Readers should consult with a qualified attorney regarding their specific circumstances. For official guidance, visit FinCEN’s Residential Real Estate Rule page.

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Yes — in most everyday situations, real estate taxes and property taxes refer to the same thing when discussing homes and land.

However, the term “property taxes” can sometimes include additional types of taxes beyond real estate — such as taxes on vehicles or business equipment.

Understanding the distinction can help homeowners avoid confusion, especially when reviewing tax bills, closing documents, or local government notices.

Why This Question Comes Up So Often

If you’ve ever purchased a home, reviewed your mortgage escrow statement, or received a tax bill from your locality, you’ve probably seen both terms used interchangeably:

• Real estate tax
• Property tax
• Local property tax
• Real property tax

It’s no surprise that homeowners frequently ask:

“Are real estate taxes and property taxes the same thing?”

The short answer is usually yes — but not always. The nuance matters, particularly in Virginia, where local governments assess multiple types of property.

Let’s break it down clearly.

What Are Real Estate Taxes?

Real estate taxes are taxes assessed on real property — meaning land and anything permanently attached to it.

This includes:

• Residential homes
• Townhomes
• Condominiums
• Commercial buildings
• Raw land
• Rental properties

In Virginia, real estate taxes are assessed and collected by local governments — cities, counties, and towns — not by the state directly.

For example, in Virginia Beach, real estate taxes are calculated using this formula:

Assessed Value × Local Tax Rate = Real Estate Tax Owed

If your home is assessed at $400,000 and the tax rate is $1.03 per $100 of value:

$400,000 ÷ 100 = 4,000
4,000 × 1.03 = $4,120 annually

That’s your real estate tax.

What Are Property Taxes?

The term property taxes is broader.

Property taxes include taxes imposed on property — but “property” can mean more than just real estate.

There are generally two types:

1. Real Property Taxes

These are the same as real estate taxes — taxes on land and structures.

2. Personal Property Taxes

These are taxes on movable property, such as:

• Vehicles
• Boats
• Motorcycles
• Business equipment
• Machinery

In Virginia, cities and counties typically impose personal property tax on vehicles, which surprises many new residents.

So while real estate taxes are a type of property tax, not all property taxes are real estate taxes.

In Virginia, What’s the Difference?

In everyday conversation, Virginia homeowners usually use “real estate taxes” and “property taxes” interchangeably when referring to their home.

However, legally and administratively, Virginia localities treat them separately.

For example, in Virginia Beach:

• Real Estate Tax is assessed by the Real Estate Assessor.
• Personal Property Tax (vehicles) is handled separately.
• Tax relief programs may apply differently to each.

That distinction becomes important in estate planning, property transfers, and tax disputes.

Why the Confusion Happens

There are a few reasons the terminology overlaps:

1. Mortgage Escrow Statements

Mortgage companies often label payments simply as “property tax,” even though they’re paying real estate tax.

2. Closing Documents

Settlement statements may refer to “property tax proration” when adjusting real estate taxes between buyer and seller.

3. National Media Usage

Articles discussing housing markets frequently use “property tax” generically.

So while technically broader, the term “property tax” often functions as shorthand for real estate tax in residential contexts.

How Real Estate Taxes Are Determined in Virginia

Since we’re focusing on Virginia homeowners, it’s helpful to understand how your real estate tax bill is actually calculated.

In Virginia:

• Properties are assessed annually (in cities like Virginia Beach).
• Assessments reflect estimated fair market value.
• The local governing body sets the tax rate.
• Bills are typically paid semi-annually.

If market values rise, assessments may increase — even if you haven’t improved your property.

Do Real Estate Taxes and Property Taxes Show Up Separately on a Tax Bill?

It depends.

For homeowners:

• Your real estate tax bill will list your home’s assessed value and tax owed.
• Your vehicle tax bill will arrive separately.
• Both may be labeled under “property taxes,” but they are assessed independently.

This is where understanding terminology becomes important — especially when budgeting.

How Often to Real Estate Taxes Change?

As taxes are based on “assessments” of value by the local tax assessor’s office, the taxes rarely stay the same for more than a few years. Then as more homes sell in the area of your home, the taxes will adjust to try to stay as close to true market value as possible. In times of rapidly rising prices of homes, the taxes will be a year or two behind but they will increase based on the increase in value. Far less frequently, taxes may go down. One other major factor that can affect real estate property taxes is when a land recently changed zoning. Agricultural tax rates are lower than residential property tax rates. Sometimes, especially when a home is of the “new construction” variety and is built on acreage that was used for farming, there can be a “roll-back” tax assessment in which an increase in taxes can be billed after the home closing. These roll-back taxes are generally the responsibility of the seller, but sometimes you need the help of a real estate attorney to hold the appropriate party responsible and for the correct amount.

How This Impacts Buyers and Sellers

When buying or selling real estate, real estate taxes matter significantly.

Buyers Should Know:

• Real estate taxes are prorated at closing.
• A higher assessed value means higher ongoing tax liability.
• Tax bills may change after reassessment.

Sellers Should Know:

• Unpaid real estate taxes can create liens.
• Tax delinquencies can delay closings.
• Proration affects net proceeds.

Understanding that “property taxes” in a closing context means “real estate taxes” avoids costly misunderstandings.

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• Virginia Beach reassesses property values every year to ensure fairness and accuracy in tax distribution.
• Assessed values are not the same as appraised or market values and can be appealed if inaccurate.
• Homeowners may be eligible for tax relief programs, and understanding your assessment is key to protecting your financial interests.

If you own property in Virginia Beach, or anywhere in the Commonwealth of Virginia, your real estate tax assessment is one of the most important — and often misunderstood — aspects of homeownership. Every year, property owners receive a notice from the City treasurer or assessor where they live estimating what their home is worth for tax purposes. This estimate, known as your assessed value, directly affects how much you owe in property taxes.

But how are these values calculated? Can they be contested? And what should you do if you think your property has been over-assessed?

This comprehensive guide will walk you through how real estate tax assessments work in Virginia Beach, VA, and what every property owner should know to avoid overpaying and plan ahead.

What Is a Real Estate Tax Assessment?

A real estate tax assessment is the valuation of a property by a local government to determine its taxable value. This assessed value is used to calculate the annual property taxes owed by the homeowner.

It’s important to note that assessed value is not always equal to:

• Appraised value: A value determined by a licensed real estate appraiser during a transaction or refinance.
• Market value: What a buyer would likely pay for the property in the open market.

In Virginia Beach, the Office of the Real Estate Assessor is responsible for conducting assessments on over 160,000 parcels of land. These assessments are based on market conditions, recent sales, and the characteristics of each property.

How Real Estate Tax Assessments Work in Virginia Beach

Unlike some localities that reassess properties every two to five years, Virginia Beach performs reassessments annually. This practice helps ensure that property values reflect current market trends and provides a more accurate basis for tax calculations.

Key Points:

• Assessments are completed each January 1st and mailed to property owners in early spring.
• The valuation date is as of July 1st of the previous year.
• The city uses a mass appraisal system to determine value, relying on recent comparable sales, property data, and automated valuation models.

Understanding the Mass Appraisal Process

The Real Estate Assessor’s Office uses a Computer Assisted Mass Appraisal (CAMA) system to analyze property data and calculate assessments. This method involves grouping properties with similar characteristics (e.g., neighborhood, size, style, age) and applying statistical models based on recent sales data.

While not as individualized as a private appraisal, mass appraisal allows for consistent and scalable valuation across thousands of properties.

What Causes a Change in Assessed Value?

Several factors can cause your property’s assessed value to increase or decrease:

1. Market Activity

If home values are rising in your neighborhood — whether due to demand, school ratings, or redevelopment — your assessment may increase even if you haven’t made any changes to the property.

2. Permits and Renovations

Major improvements such as kitchen remodels, home additions, or finishing a basement may increase your assessed value. These changes are usually tracked through building permits.

3. New Construction

If you build a new home or substantially rebuild an existing one, expect a reassessment once construction is complete.

4. Corrected Errors

If the Assessor’s Office identifies a mistake in the previous assessment (e.g., wrong square footage), your value may be adjusted accordingly.

How Real Estate Taxes Are Calculated in Virginia Beach

Your property taxes are calculated using this formula:

Assessed Value × Tax Rate = Annual Property Taxes

As of the most recent tax year, Virginia Beach’s real estate tax rate is $1.03 per $100 of assessed value. So, if your home is assessed at $400,000:

$400,000 ÷ 100 = 4,000
4,000 × $1.03 = $4,120 in annual property taxes

In addition to the base rate, Virginia Beach may impose special levies or stormwater fees, depending on your location.   The tax rate varies between Cities/Counties in Virginia.

Tax Proration for New Buyers or Builders

If you purchase a home partway through the year or finish new construction mid-year, your taxes may be prorated. The city will calculate the taxes owed for your period of ownership, ensuring you’re only responsible for your portion of the year.    Also, SUPPLEMENTAL ASSESSMENTS may be levied, even after you close on the purchase of your home, especially, if it was changed from property zoned for farming and converted to a residential zoning.   

Available Tax Relief and Exemptions

Virginia Beach offers several property tax relief programs for qualifying residents:

1. Tax Relief for the Elderly or Disabled

Eligible homeowners may receive full or partial exemptions based on:

• Age (65 or older)
• Total income
• Net worth (excluding the home)

2. Disabled Veteran Exemption

Veterans with a 100% service-connected, permanent, and total disability may receive a full exemption on their primary residence.

3. Surviving Spouses

Surviving spouses of eligible veterans or first responders may also qualify for exemptions.

Each program has its own application process and annual deadlines, usually in the spring.

For detailed requirements and forms, visit the Virginia Beach Tax Relief Portal.

How to Appeal Your Property Assessment

If you believe your assessment is too high or based on inaccurate information, you have the right to appeal.

Step 1: Informal Review

• Contact the Assessor’s Office directly.
• Discuss your concerns and submit any documentation (appraisals, photos, comps).
• Often this step resolves the issue without a formal appeal.

Step 2: Board of Equalization (BOE)

• If you’re not satisfied after the informal review, you can file a formal appeal with the BOE.
  Consider carefully WHEN you might want to take this action!    If you plan to sell your home soon, you might want to leave the assessment as high as possible. On the other hand, if you intend to live in the property for the long run, trying to lower the assessment could save you a significant amount of money.
• This independent board reviews assessments and holds public hearings.
• Evidence is required: recent comparable sales, contractor receipts, or independent appraisals.
  

Step 3: Circuit Court Appeal

• As a final option, property owners may appeal to the Virginia Beach Circuit Court.
• This route is more complex and may require legal representation.

📅 Deadline to Appeal: Typically in mid-May — check the Assessor’s website each year for the exact date.

How Assessments Affect Buyers and Sellers

For Buyers

• The assessment helps estimate annual property taxes.
• Important during escrow and budgeting.
• Be aware: your first tax bill may differ from the seller’s if the assessment increases post-sale.

For Sellers

• A low assessment may be used by buyers to argue a lower offer.
• A high assessment may discourage interest if it implies higher taxes.
• Understand how your assessment compares to market value when pricing your home.

Strategies to Manage Your Property Tax Burden

• Monitor your assessments yearly. Don’t ignore them — you only have a short window to challenge errors.
• Save documentation for home improvements, repairs, or damage. These may help reduce your assessment if needed.
• Understand your rights and options for relief programs.
• Consult a real estate attorney if you feel your property rights are being affected or if you face a complex appeal.

Frequently Asked Questions

Is my assessed value the same as my home’s market value?

Not necessarily. Assessed values are calculated using mass appraisal techniques and may lag behind actual market conditions.

Can my assessment go up even if I haven’t changed anything?

Yes. If market values increase in your neighborhood, your property’s assessed value may rise based on comparable sales.

When are property taxes due in Virginia Beach?

Taxes are billed twice per year — typically due on June 5 and December 5.

What happens if I don’t pay my real estate taxes?

Failure to pay may result in penalties, interest, and eventually a tax lien or foreclosure action by the city.

Conclusion

Understanding how real estate tax assessments work in Virginia Beach can help you:

• Budget more effectively,
• Avoid overpaying on your tax bill, and
• Protect your rights as a property owner.

Whether you’re a long-time resident or a first-time buyer, keeping an eye on your assessment and knowing when and how to appeal could save you thousands over the life of your homeownership.

For more information or to appeal your assessment, visit the Virginia Beach Real Estate Assessor’s website.

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Understanding the Basics of a Virginia Real Estate Contract

Once both the buyer and seller sign the contract, it becomes legally enforceable. The contract is generally fully enforceable even if the signatures are NOT  notarized. In Virginia, this usually happens after an offer is made by the buyer, accepted by the seller, and both parties sign the written agreement. The contract will include key terms such as:

• Purchase price
• Contingencies (inspection, financing, appraisal, etc.)
• Closing date
• Earnest money deposit

If a buyer wants to walk away after this point, they must either rely on a valid contingency or be prepared for possible legal and financial consequences. The old saying is still true:  “Breach is always an option.”   For a buyer to be “cold feet” or “buyer’s remorse”, there are numerous options from honoring the contract and closing only to resell the property to just refusing to close, which in many cases will constitute a breach of the contract.  Most, but not all, contracts in Virginia do provide for valid reasons to cancel the contract and if one of those reasons are available to the Buyer, then the decision not to close will not constitute a “breach”.

Common Contingencies That Allow Buyers to Cancel

1. Home Inspection Contingency

This allows buyers to have the home professionally inspected. If significant issues are found (like a faulty roof, mold, or foundational problems), the buyer can usually walk away or renegotiate the deal without losing their earnest money. Home Inspection Contingencies can be quite complex and be governed by a “PICA” (property inspection contingency addendum) and a “PICRA” (property inspection contingency removal addendum).   Time limits are very important and a large part of all real estate litigation focuses on the PICRA.      

2. Financing Contingency

If the buyer can’t obtain a mortgage within a specified timeframe, they can usually exit the contract penalty-free. Lenders can deny financing for many reasons, including low credit scores, job changes, or issues with the property itself. Many contracts in Virginia “open up” the lender underwriting of a Buyer’s loan to scrutiny by the Seller’s closing team.   Basically, the Buyer waives rights of privacy and the lender is authorized to speak freely with the Seller’s agent on why a loan may not be approved.   It is essential that the loan denial NOT be a result of any factors under the Buyer’s control or manipulated by the Buyer to serve as an exit strategy when a Buyer changes his/her mind about going to closing. 

3. Appraisal Contingency

If the home is appraised for less than the contract price, the buyer may either renegotiate or cancel the agreement. Lenders won’t approve a loan above the appraised value unless the buyer covers the difference out-of-pocket.

4. Home Sale Contingency

This allows a buyer to make the purchase contingent on the sale of their current home. If they can’t sell their existing home within the specified period, they can terminate the deal. Such contingencies, while comforting to a Buyer, may make their offer less appealing to a Seller and less likely to become an “accepted” and binding contract.

Each of these must be explicitly written into the contract to be enforceable.

What Happens If There Are No Contingencies?

If the buyer tries to back out without an applicable contingency, several outcomes are possible:

• Forfeiture of Earnest Money: The seller may keep the buyer’s deposit as compensation for the failed deal.
• Legal Action: In rare cases, the seller may sue the buyer for specific performance (forcing them to go through with the purchase) or damages. But in most cases, a Seller who is the victim of a breach of contract will resell the property to Set the Damages, and if the Seller makes less money than they would have made on the contract that was broken, will be able to get an award from a judge against the Buyer for the amount of lost profits and legal fees expended.

The Role of Earnest Money

Earnest money is typically 1-3% of the purchase price and is held in escrow. If the buyer cancels for a reason allowed in the contract, they typically get their money back. If they cancel for a reason not covered, the seller can often keep it.

How to Properly Cancel a Real Estate Contract in Virginia

1. Review the Contract: Look at all contingency clauses and deadlines.
2. Act Within the Timelines: Each contingency has a specific deadline. Missing it may forfeit the protection it offers.
3. Provide Notice in Writing: Communicate clearly, in writing, and according to the notice provisions in the contract.
4. Work with Your Agent and Attorney: Professionals can help you understand your options and avoid costly mistakes.

Can a Buyer Back Out After a Home Inspection in Virginia?

Yes—if there is an inspection contingency in the contract. Buyers can typically walk away without penalty if the home inspection reveals significant defects, and the seller is unwilling or unable to make repairs or negotiate a solution.

Can a Buyer Back Out After the Appraisal?

Yes, if there’s an appraisal contingency. If the appraised value is lower than the purchase price and the buyer can’t or won’t cover the gap, they can cancel the contract without losing their earnest money. Even if there is no Appraisal Contingency in a contract, some loans, such as VA or FHA loans require this protection for the Buyer and the law may “trump” the contract language to the contrary.

What Happens If a Buyer Just Gets Cold Feet?

Unfortunately, cold feet alone isn’t a valid legal reason to break the contract. If there are no contingencies left to rely on, walking away can cost the buyer their earnest money—and potentially more if the seller sues for breach of contract.

Protecting Yourself Before Signing a Real Estate Contract

• Always include necessary contingencies that apply to your financial and personal situation.
• Get pre-approved for a mortgage before making an offer. But keep in mind that pre-qualification by your lender is not binding or 100% certain to mean that they will actually make your loan.
• Understand what you’re signing. Never rush into a contract without fully reading it.
• Consult a real estate attorney if you have any doubts or complexities.

When to Contact a Real Estate Attorney

If you’re considering backing out of a real estate contract, or you’re a seller dealing with a buyer who wants to cancel, legal counsel can be crucial. An experienced real estate attorney in Virginia can review the contract, explain your rights, and help you take the right steps.

At Pittman & Associates, we help buyers and sellers navigate real estate transactions with clarity and confidence. Whether you’re facing a contract dispute or planning a home purchase, we’re here to guide you every step of the way.

Final Thoughts

In Virginia, a buyer can back out of a real estate contract under certain conditions—usually through carefully written contingencies. Understanding your rights and obligations under the contract is critical before making any decisions. When in doubt, seek legal advice. Walking away without a plan could cost you far more than a deposit.

The post Can a Buyer Back Out After a Signed Real Estate Contract in Virginia? appeared first on Pittman & Associates.

Many homeowners mistakenly assume they can deduct all home-related expenses, but the IRS has specific rules on what qualifies. This article provides a comprehensive guide to the tax breaks available to homeowners in 2024, covering mortgage interest, property taxes, home offices, energy-efficient upgrades, and more.

Let’s explore what you can deduct, what you can’t, and how to make the most of homeownership tax benefits.

Section 1: Mortgage Interest Deduction

✅ What You Can Deduct

One of the most significant tax breaks for homeowners is the mortgage interest deduction. If you itemize deductions on your tax return, you can deduct interest paid on a mortgage loan used to buy, build, or improve a home.

• Maximum Deduction:
  • Up to $750,000 of mortgage debt (or $375,000 if married filing separately).
  • If you purchased your home before Dec. 16, 2017, the limit is $1 million ($500,000 if married filing separately).
• Eligible Properties: Applies to your first and second home (not investment properties).
• Mortgage Points: If you paid discount points to lower your interest rate, these may be deductible, either in full in the year paid or over the life of the loan.

❌ What You Can’t Deduct

• Mortgage principal payments (only interest is deductible).
• Interest on a home equity loan or HELOC (unless used for home improvements).
• Mortgage interest on rental properties (deducted differently as a business expense).

📌 Tax Tip: Your mortgage lender will send Form 1098 in January, summarizing how much interest you paid.

Section 2: Property Tax Deduction (SALT Cap)

✅ What You Can Deduct

If you itemize, you can deduct state and local property taxes, which fall under the State and Local Tax (SALT) deduction.

• Maximum Deduction: $10,000 ($5,000 if married filing separately).
• Includes: Property taxes on a primary or secondary residence.

❌ What You Can’t Deduct

• HOA fees, condo assessments, or other homeowner fees.
• Utility costs like water, sewer, or trash collection.
• Property transfer taxes paid when buying/selling a home.

📌 Important: The $10,000 SALT cap is set to expire in 2025, unless Congress extends it.

Section 3: Home Office Deduction

✅ What You Can Deduct (Self-Employed Homeowners)

If you work from home and are self-employed, you may be eligible for a home office deduction. The space must be exclusively used for business and be your principal place of business.

Deduction Options:

• Simplified method: $5 per square foot (up to 300 sq ft, max deduction: $1,500).
• Actual expense method: Deducts a percentage of home expenses (e.g., utilities, insurance, repairs).

❌ What You Can’t Deduct

• Home office expenses if you are a remote employee (TCJA removed this deduction in 2018).
• Any portion of your home used for both personal and business purposes.

📌 Tax Tip: Keep records of home office expenses and calculate the square footage correctly.

Section 4: Capital Improvements vs. Repairs

✅ Capital Improvements That Increase Home Value

While home repairs are not tax-deductible, certain capital improvements can provide tax benefits when selling your home. These expenses increase your home’s tax basis, reducing capital gains tax when you sell.

Examples of Capital Improvements:

• Major renovations: Kitchen or bathroom remodels.
• Structural upgrades: New roof, HVAC system, or plumbing.
• Accessibility modifications: Installing wheelchair ramps or widening doorways.

❌ What You Can’t Deduct Immediately

• Routine home repairs (e.g., fixing leaks, painting).
• Cosmetic improvements that don’t add value.

📌 Tax Tip: Keep receipts and records for all capital improvements to lower taxable gains when you sell.

Section 5: Medical-Related Home Modifications

✅ What You Can Deduct (If Medically Necessary)

Some home modifications may qualify as a medical expense deduction if they are medically necessary and prescribed by a doctor.

Eligible Modifications:

• Wheelchair ramps, stairlifts, or widening doorways.
• Bathroom grab bars and accessible showers.
• Lowering cabinets for disability access.

❌ What You Can’t Deduct

• Home upgrades made for convenience rather than medical necessity.
• Costs reimbursed by insurance.

📌 Tax Tip: These expenses must exceed 7.5% of adjusted gross income (AGI) to qualify.

Section 6: Green Energy Tax Credits

✅ Energy Tax Credits for Homeowners

Unlike deductions, tax credits directly reduce what you owe in taxes. The government offers significant tax credits for green energy upgrades.

1. Residential Clean Energy Credit (30%)

• Covers solar panels, wind turbines, geothermal systems, and battery storage.
• Available through 2032.

2. Energy Efficient Home Improvement Credit (Up to $1,200 Annually)

• Covers insulation, energy-efficient doors/windows, and HVAC systems.
• Heat pumps & biomass stoves qualify for up to $2,000.

3. EV Charger Tax Credit (30%)

• 30% of installation costs for home EV charging stations (max: $1,000).

📌 Tax Tip: These credits are not refundable, meaning they can’t exceed the taxes you owe.

Section 7: Other Tax Considerations for Homeowners

📌 Capital Gains Exclusion:

• When selling a primary residence, homeowners can exclude up to:
  • $250,000 (single filers) / $500,000 (married) in gains.
  • Must have lived in the home for 2 out of the last 5 years.

📌 Mortgage Insurance Deduction:

• Deduction for PMI (private mortgage insurance) expired in 2021 (Congress may extend it).

📌 Casualty Loss Deduction:

• Only available if your home is damaged in a federally declared disaster.

Keep in mind that some deductions you take now could hurt you when you sell the home.

For example, taking an office in the home deduction or depreciation you may have taken on an investment property that later becomes your residence, these immediate benefits can reduce your tax basis and increase your Capital Gains Tax when you sell. Some homeowners, usually those that have owned their home for decades, have such a large tax bill for capital gains when they sell that they needs specialized tax advice.

Two alternatives to paying a large capital gains tax may be to die in the property and let your heirs under your will get a “stepped up tax basis to current fair market value; or in some cases a homeowner can move out, use the property for rental income for a year for a certain number of years and then sell the property as investment property and roll the capital gains into a replacement property. This latter strategy may be facilitated by a 1031 Exchange.

The post Homeowner Tax Deductions & Credits: What You Can (and Can’t) Write Off in 2025 appeared first on Pittman & Associates.

The Role of a Real Estate Attorney

A real estate attorney is a licensed professional specializing in the legal aspects of real estate transactions. Their primary responsibilities include:

• Reviewing Contracts: Real estate attorneys meticulously review purchase agreements, sales contracts, and other legal documents to ensure they comply with state laws and protect their client’s interests.
• Providing Legal Advice: They offer expert legal guidance on issues such as property disputes, zoning laws, and mortgage agreements.
• Negotiating Terms: Attorneys often negotiate contract terms on behalf of their clients, addressing contingencies, repairs, and other critical aspects.
• Conducting Title Searches: We do not conduct most of our title examinations but rely on full time, insured third party independent contractors to provide title examinations.   As real estate attorneys, we do take the time and prerogative to review and evaluate title examinations.
• Closing Transactions: In some states, attorneys must oversee the closing process, ensuring all legal requirements are met and documents are correctly executed. Virginia law allows a buyer or seller to forego participating in a real estate deal with the protection and expertise of having an attorney.   Attorneys still conduct most of the complex and commercial closings. Make sure you understand the value and the relatively minor increase in fees for having your own attorney in your corner and/or conducting your closing.

The Role of a Title Company

Title companies focus primarily on the financial and administrative aspects of real estate transactions. For the title insurance company, the protection of the company itself is the paramount concern. Strict adherence to home office rules generally, but not always also benefits the customer. The relationship of the Title Company to the customer can be very opaque and the duties of loyalty unclear and rarely set forth in an advanced engagement letter. Our attorneys always provide a written engagement letter upon request and make every effort to provide an engagement letter in all attorney-client undertakings.

Key functions of a title company may include:

• Title Searches: Title companies conduct thorough searches of public records to identify any issues with the property title, such as liens or encumbrances.
• Title Insurance: They provide title insurance policies to protect buyers and lenders against potential title defects that may arise after the purchase.
• Escrow Services: Title companies often act as neutral third parties, managing escrow accounts where funds are held until the closing process is complete.
• Closing Coordination: They prepare closing documents, ensure all financial transactions are accurately processed, and facilitate the transfer of ownership.

State-Specific Requirements for Home Closings

The requirements for who is allowed to conduct home closings vary significantly across the United States. Generally, states can be categorized into three groups: attorney states, title company states, and states where either can conduct closings.

1. Attorney States: In these states, a real estate attorney is required to oversee the closing process. This includes preparing and reviewing documents, ensuring legal compliance, and facilitating the transfer of funds and property. Examples of attorney states include:
   • Georgia: Requires an attorney to be present at closings to ensure all legal requirements are met.
   • South Carolina: Mandates attorney involvement in the closing process.
   • Massachusetts: Attorneys must handle real estate closings, including the preparation of all necessary legal documents.
2. Title Company States: In these states, title companies can conduct home closings without the need for an attorney. Title companies handle the preparation and review of documents, manage escrow accounts, and issue title insurance. Examples include:
   • California: Title companies can manage the entire closing process, though attorneys may still be involved.
   • Arizona: Title companies handle closings and title insurance, with attorneys often playing an advisory role.
   • Nevada: Title companies conduct closings, but real estate attorneys may be consulted for legal advice.
3. Either/Or States: Some states allow either a real estate attorney or a title company to handle the closing process. The choice often depends on the complexity of the transaction and the preferences of the parties involved. Examples include:
   • Florida: Both attorneys and title companies can conduct closings, with many buyers and sellers opting for attorney involvement for added legal protection.
   • Texas: Either can handle closings, but attorneys are often involved in more complex transactions.

Why Consider Adding a Real Estate Attorney to Your Team?

Even in states where a title company can handle the closing process, there are compelling reasons to consider adding a real estate attorney to your team.

1. Legal Expertise: Real estate transactions involve numerous legal complexities that can have significant implications if not handled correctly. An attorney provides expert legal advice and ensures all contracts and documents comply with state and federal laws, protecting your interests. Legal expertise and education in many areas of the law, not just real estate law. Real estate closings may be affected by matters of Constitutional Law, Tort Law, administrative or regulatory law, family law, insurance law, environmental law, construction law, and many other areas of law.
2. Contract Review and Negotiation: Attorneys review and negotiate the terms of purchase agreements, sales contracts, and other legal documents. They can identify potential issues, suggest modifications, and ensure that the contract terms are favorable and legally sound.
3. Title Search and Insurance: While title companies conduct title searches, an attorney can provide an additional layer of scrutiny. They can review the title search results for legal issues that may not be immediately apparent and advise on the appropriate type of title insurance coverage. Title Searches and Insurance are increasingly complex and the industry giants that provide title insurance constantly tighten the language of title insurance policies to reduce the risk and exposure to liability for the home office. The agent or employee that conducts the closing are forbidden to give legal advice at closing if they are an employee of the title company, even if they are also an attorney or formerly engaged in a law practice. To provide legal advice in such situations by title company employees is the “unauthorized practice of law” leading many companies to forbid their “closers” from giving any approximating legal advice. Rarely do they give explanations of the actual policy or the coverages or risks  or the somewhat slow and tedious process of responding to title claims. Most law persons are unaware that title insurance policies are actually title indemnity policies, not truly insurance policies! That technically means that their “insured” must suffer a loss before the home office is obligated to pay damages to the insured. On the other hand, the insured has a duty to report a potential claim promptly so that any “title reparative” work can be investigated and tried before losses are suffered. But failure to promptly report potential claims and result in a total loss of coverage! Finally, title companies that provide closing services often make quite a few decisions on the seriousness and risk level of potential title problems they uncover in the title examination stage and rarely involve the future insured in resolving the  problems or deciding whether they want to undertake a risk.
4. Dispute Resolution: Real estate transactions can sometimes lead to disputes over contract terms, property condition, or title issues. An attorney can represent you in negotiations or litigation, helping to resolve disputes and protect your rights. A title Company that attempts to conduct a transaction and encounters a legal dispute in the process is directed by Virginia law to stop the closing and to provide the customer the names and contact information for 3 actual attorneys who might be able to help give them legal advice in the closing process. This practice almost always results in a delay in the closing process and can jeopardize loan commitments, moving contracts, move out dates, and other time sensitive matters.
5. Closing Process Oversight: In states where attorneys are required to oversee the closing process, their involvement ensures that all legal requirements are met. Even in states where they are not required, having an attorney oversee the closing can provide peace of mind and prevent potential issues.
6. Personalized Legal Advice: Every real estate transaction is unique, and an attorney can provide personalized legal advice tailored to your specific situation. Whether you are a first-time homebuyer or a seasoned investor, an attorney can guide you through the process and address any legal concerns.

No one can force you to use their attorney or title company in a transaction but they may offer to pay the service provider for an opposing party if that party agrees to use the designated attorney or title company. This can be a $500 to $700 value, but it can also result in the failure to disclose or resolve pre-existing title issues.

Conclusion

Understanding the differences between a real estate attorney and a title company, as well as the varying state requirements for home closings, is crucial for anyone involved in a real estate transaction. While title companies play a vital role in the administrative and financial aspects of the process, real estate attorneys offer essential legal expertise and protection.

Whether your state requires an attorney for closings or not, considering the addition of a real estate attorney to your team can provide valuable benefits. From contract review and negotiation to dispute resolution and legal advice, an attorney can help ensure that your transaction is smooth, legally sound, and in your best interest.

As you navigate the home buying or selling process, weigh the benefits of having a real estate attorney by your side. Their expertise can make a significant difference in protecting your investment and ensuring a successful transaction.

The post Understanding the Differences: Real Estate Attorney vs. Title Company appeared first on Pittman & Associates.