How much does Portsmouth's new tax on run-down buildings cost the owner of an empty house? On a property assessed at $200,000, it adds about $120 a year at the blighted rate and about $240 at the derelict rate. That's less than many homeowners pay for one service call.
The money matters less than how the classification works. Under the state law behind it, the higher rate applies to the property and the land under it. It stays until the City Assessor decides the property no longer qualifies. Heirs holding a vacant family home and buyers looking at fixer-uppers both need to understand that before they set a price or write an offer.
What the new rates add, in dollars
On June 23, 2026, Portsmouth City Council voted 7-0 to add a new division to the city's tax code. It created separate tax classes for blighted properties and derelict buildings. The Virginian-Pilot reported that the changes took effect July 1. For fiscal 2027, blighted property is taxed at $1.30 per $100 of assessed value and derelict buildings at $1.36, compared with the general rate of $1.24.
Those rates are 5% and 10% above the general rate. That's the maximum premium Virginia Code § 58.1-3221.6 allows for each class. At three sample assessments, the yearly bills compare like this:
| Assessed value | General rate, $1.24 | Blighted, $1.30 | Derelict, $1.36 |
|---|---|---|---|
| $150,000 | $1,860 | $1,950, or +$90 | $2,040, or +$180 |
| $200,000 | $2,480 | $2,600, or +$120 | $2,720, or +$240 |
| $300,000 | $3,720 | $3,900, or +$180 | $4,080, or +$360 |
The statute applies each class to the building "along with the land such properties are located on," so the higher rate is charged on the full assessment. That makes the increase in Portsmouth's land values relevant. When the city adopted its budget in May, the Pilot reported that the $1.24 rate stayed flat but homeowners could see higher bills because land assessments grew beyond historical norms. A larger base makes each surcharge a bit bigger, though it remains small next to the overall cost of owning a house.
Why Portsmouth can use this tool
Not every Virginia city can create these classes. The statute limits them to a "qualifying locality," meaning one that scored 100 or higher on the fiscal stress index the Department of Housing and Community Development published in July 2020. Portsmouth used that authority after a deferral in May and months of discussion.
According to the Pilot, city officials said the goal is for owners who don't maintain their properties to help cover the extra costs those properties create for the city. That explains why the surcharge is modest. It recovers some of the city's costs and puts an official status on the property's record. It isn't set high enough to force a sale.
The real cost is the classification
The rate is easy to calculate. The process of getting onto and off the list matters more for a sale, and the statute and the Pilot's reporting lay out its main steps:
- The City Assessor decides. The Pilot reported that City Assessor Steve Edwards determines which properties qualify. The statute puts that decision with the locality's real estate assessor.
- Two definitions apply. Blighted property is a dilapidated or deteriorated structure that endangers public health, safety or welfare. Under § 15.2-907.1, a derelict building is a finished or unfinished structure that might endanger public health, safety or welfare. For a continuous period of more than six months, it must also have been vacant, boarded up in accordance with the building code, and not lawfully connected to electric service or to any required water or sewer service. The tax statute adopts the definitions in § 36-3 and § 15.2-907.1.
- The higher rate continues until the assessor determines the property no longer qualifies.
- Improvement brings the rate back down. Once a property has been improved, it can be taxed at the regular $1.24 rate again, the Pilot reported.
- Owners can appeal. An owner who disagrees can appeal the assessor's determination as an erroneous assessment under § 58.1-3980 and the sections that follow it.
Step 2 matters for estate sales. The derelict definition lists vacancy, boarding and disconnected utilities, all lasting more than six months, together with a possible danger to public safety. A family home that sits empty through a long settlement period is the kind of property this definition was written to address, so heirs should ask the City Assessor or their attorney how it would apply before deciding how long the house will sit.
Step 3 matters most to buyers. The class attaches to the property, not the owner, so a sale doesn't reset it. A buyer who closes on a classified house pays the higher rate until the assessor determines it no longer applies. Repairs alone don't end the surcharge.
The rehab credit changed the same night
On the same June 23 agenda, the council adopted on consent an ordinance that amended Divisions 5 and 6 of the city's tax exemption rules "to modify the rules and requirements applicable to the Rehabilitated Real Estate Assessment Credit Program." Division 6 covers properties in the Urban Enterprise Zone. So in one meeting, the council added a surcharge on neglected properties and changed the incentive for fixing older ones.
The city's tax exemption programs page describes a residential rehabilitation exemption with these terms:
- Structures at least 25 years old
- At least a 40% increase in base assessed value
- Added structural area under 15%
- An exemption lasting 10 years
- An application to the City Assessor within 10 days of getting rehabilitation permits, with a $50 fee
Because the ordinance was amended in June 2026, ask the City Assessor's office for the current terms before counting the exemption in a renovation budget. The 10-day window after permits is the deadline that's easiest to miss.
For houses in historic districts, the state offers a separate incentive. Virginia Department of Historic Resources' State Historic Rehabilitation Tax Credit equals 25% of qualifying rehabilitation expenses and is open to owner-occupied homes. Eligible costs must equal at least 25% of the building's assessed value in the year before work starts. The property must be individually listed, contributing to a listed district, or certified as eligible.
Why holding time costs more this fall
All of this matters more when houses take longer to sell. REIN's September 2026 report counted 6,357 active residential listings across Hampton Roads. That was the highest number since April 2020 and up 16.17% from a year earlier. Months of supply rose to 2.97, and median days on market reached 30, up from 27 in September 2025. Portsmouth's median sales price rose 1.7% from September 2025 to September 2026. Virginia Beach's rose 8.4%. The president of REIN's board said in the release that higher inventory gives buyers "some additional leverage."
Taken together, these numbers point to a real risk for heirs. With more listings to choose from, buyers can compare more houses and negotiate harder. An empty house that needs work has more competition and may take longer to sell. The longer a deteriorating house sits empty, the closer it gets to the conditions the tax classes describe. A classification stays on the property's record, and the next buyer would find it during due diligence. That can cost a seller more than the surcharge itself.
Other carrying costs went up on July 1 as well. Per the Pilot's May budget coverage, water, sewer and stormwater rates rose 5%, and the stormwater fee is now $17 per equivalent residential unit.
This post is general information, not legal or tax advice. Before you act, confirm your property's status and your options with the City Assessor, an attorney or a tax professional.
FAQ
Does the higher rate apply to the land too?
Yes. The statute defines each class as the building along with the land it sits on, so the higher rate applies to the full assessment.
Is there help for older owners who can't afford repairs?
The Portsmouth Redevelopment and Housing Authority's Senior Home Repair Grant Program offers up to $15,000 for health and safety, weatherization and accessibility work. It's for owner-occupants 62 and older who meet income limits and owe no property taxes. The program is currently closed to new submissions, so check with PRHA about when it will reopen.
Did Portsmouth also raise its general tax rate?
No. The general real estate rate is $1.24 per $100 for fiscal 2027, the same as the year before.
If you're settling an estate or deciding when to list an empty house in Portsmouth, Conner & Company can help you plan a timeline that gets the house ready to show and on the market sooner, so it spends less time sitting empty. Get Your Instant Home Valuation to see where the house stands today.
