1031 Exchanges in Virginia: Rules, Taxes, Insurance, and the Long Arc

A Shop 1031 research page. Reviewed 2026-06-03. Every claim sourced; sources collected at the foot of the page.

Virginia is a conforming state with a layered recordation and grantor tax stack at recording, not a federal-only state. The distinction matters because Virginia imposes both a state recordation tax and a state-and-local grantor tax that stack at recording, and the Northern Virginia federal-employment concentration produces a distinct commercial cap-rate environment from the rest of the state. Virginia conforms to federal §1031 through Virginia Code Title 58.1 and taxes recognized boot at graduated rates topping at 5.75 percent.

§1. 1031 mechanics in Virginia

The federal floor applies under 26 U.S.C. §1031 and 26 C.F.R. §1.1031(k)-1. ^{1 2}

Virginia conforms to federal §1031 under Va. Code Title 58.1, Chapter 3. Recognized boot is taxed at the Virginia graduated rate topping at 5.75 percent. ³

Virginia imposes a state recordation tax under Va. Code §58.1-801 et seq. at $0.25 per $100 of consideration ($2.50 per $1,000), payable at recording. Counties may impose an additional recordation tax of up to one-third of the state rate (approximately $0.0833 per $100). ⁴

Virginia imposes a grantor tax under Va. Code §58.1-802 at $0.50 per $500 of consideration ($1.00 per $1,000) on the seller, divided equally between the state and the locality. On a $5,000,000 acquisition, the combined recordation tax plus grantor tax stack runs roughly $20,000 to $22,500 depending on the locality. Like-kind exchanges are taxable conveyances under the Virginia recordation framework with no §1031 exemption. ^{5 6}

Virginia imposes no state-level QI registration regime. Federal §1031 rules apply.

Virginia is an attorney-state for real estate closings.

§2. Property tax in Virginia

Virginia has an effective property tax rate of approximately 0.81 percent of owner-occupied housing value, below the 1.02 percent national median. The structural mechanics are governed by Va. Code Title 58.1 with assessment administered at the county and city level. Cities operate as independent jurisdictions in Virginia, separate from counties, producing more granular jurisdictional variation than in most states. ⁷

Harlow’s note on unit economics. On a $5,000,000 Northern Virginia commercial acquisition (Fairfax, Loudoun, Arlington, Alexandria), year-one property tax runs roughly $50,000 to $90,000 depending on the specific jurisdiction. Property tax stacks in the most expensive Northern Virginia jurisdictions are above the state average.

§3. Property insurance in Virginia

Virginia property insurance carries coastal hurricane and named-storm exposure on the Hampton Roads and Eastern Shore corridors, severe-weather exposure inland, and the Virginia Property Insurance Association (Virginia FAIR Plan) provides residual-market coverage. The Virginia Bureau of Insurance regulates carrier conduct. ⁸

Harlow’s note on unit economics. For a $5,000,000 Northern Virginia commercial property, expect property-insurance expense in the range of 0.4 to 0.7 percent of insured value. For Hampton Roads coastal property, 0.6 to 1.3 percent.

§4. Demographic trends

Virginia’s population stood at approximately 8.85 million as of 2025 Census estimates, with modest positive growth concentrated in Northern Virginia and the broader Washington DC suburban corridor. The Hampton Roads corridor and the Richmond metropolitan area concentrate secondary growth. ^{9 10}

Median household income in Virginia was approximately $90,000 in 2024, well above the national median, reflecting the federal-employment concentration in Northern Virginia. ^{11 12}

The major Virginia markets are Northern Virginia (Fairfax, Loudoun, Arlington, Alexandria, Prince William, approximately 3.5 million population including parts of the broader DC metro), Hampton Roads-Virginia Beach-Norfolk (approximately 1.8 million), Richmond (approximately 1.4 million), Charlottesville (approximately 220,000), and Roanoke (approximately 315,000). Northern Virginia concentrates the deepest balanced commercial market in the state with the strongest federal-employment-driven office demand; Hampton Roads concentrates port and military-base economy; Richmond serves the state-government and finance corridor.

§5. Unique legal and financial considerations

The first is the Northern Virginia federal-employment concentration and the data-center corridor in Loudoun County, both of which produce cap-rate environments distinct from the rest of the state.

The second is the independent-city jurisdictional structure unique to Virginia, which produces more granular jurisdictional variation than most states.

The third is the Land Use Assessment program for qualifying agricultural and horticultural land, which provides preferential valuation with rollback tax on conversion.

The fourth is the post-Defense-Base-Closure realignment legacy affecting certain submarkets.

§6. Closing summary and the work ahead

The Virginia 1031 exchanger is operating in a market with a clear set of distinguishing features. The federal floor applies; Virginia fully conforms at graduated rates topping at 5.75 percent; the recordation tax and grantor tax stack at recording does not exempt §1031; property tax effective rate is below the national median with material variation across independent cities; Northern Virginia federal-employment and data-center corridors produce distinctive cap rates; Hampton Roads coastal property carries hurricane exposure; agricultural Land Use Assessment provides preferential valuation with rollback on conversion. The jurisdiction-specific factors above are starting-point context. A state-experienced CRE professional will translate them into deal-specific judgment.

This page is the working map. The actual exchange is run by people. A Virginia-licensed real estate attorney, a Virginia-licensed CPA familiar with §1031, a Qualified Intermediary, and a CRE professional who knows this market and these properties. Shop 1031 is the analytics layer that triages which deals deserve your time. The professionals do the work.

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Shop 1031 is an independent analytics platform. We are not a brokerage, a law firm, a tax advisor, a lender, or a Qualified Intermediary. Every 1031 exchange should be reviewed by a state-licensed real estate attorney, a CPA familiar with IRC §1031, and a QI. Brokerage and advisory services, when used, are provided by independently licensed third parties under separate engagement. This page is research, not advice. The Virginia-specific surfaces discussed (recordation tax and grantor tax stack with no §1031 exemption, independent-city jurisdictional structure, Northern Virginia federal-employment and data-center corridor pricing, Hampton Roads coastal hurricane exposure, Land Use Assessment rollback on conversion) each carry material risk if mishandled and should be addressed with a Virginia-licensed attorney, a Virginia-licensed CPA, and a Qualified Intermediary before identification, not after.

Federal authority: 26 U.S.C. §1031; 26 C.F.R. §1.1031(k)-1.

Virginia authority: Va. Code Title 58.1 (Taxation), §58.1-801 et seq. (recordation tax), §58.1-802 (grantor tax).

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