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2001 SESSION
013121540Be it enacted by the General Assembly of Virginia:
1. That § 58.1-3603 of the Code of Virginia is amended and reenacted as follows:
§ 58.1-3603. Exemptions not applicable when building is source of revenue.
A. Whenever any building or land, or part thereof, exempt from taxation
pursuant to this chapter and not belonging to the Commonwealth is a source of
revenue or profit substantial net income, whether by lease or otherwise, all of
such buildings and land shall be liable to taxation as other land and buildings in the same
county, city or town. When a part but not all of any such building or land,
however, is a source of revenue or profit substantial net income, and the
remainder of such building or land is used by any organization exempted from taxation pursuant to
this chapter for its purposes, only such portion as is a source of profit or
revenue substantial net income shall be liable for taxation.
B. In assessing any building and the land it occupies pursuant to subsection A,
the assessing officer shall only assess for taxation that portion of the
property as is a source of profit or revenue substantial net income and the tax
shall be computed on the basis of the ratio of the space as is a source of
profit or revenue substantial net income to the entire property. When any
such property is leased for portions of a year the tax shall be computed on the basis of the
average use of such property for the preceding year.
C. In determining whether any building or land, or part thereof, is a source of
revenue or profit substantial net income, rent from the lease of the property
applied to reduce indebtedness against the property by payment of the principal of an
outstanding bond or note held by a political subdivision of the Commonwealth shall not
constitute revenue or profit income, provided that the property is leased to a
lessee who is exempt from taxation pursuant to § 501 (c) (3) of the Internal
Revenue Code and is used by such lessee exclusively for charitable purposes.
D. For purposes of this section, "net income" shall be determined using generally accepted accounting principles, including, but not limited to, the cost of depreciation and other expenses relating to the operation and maintenance of such building and land.