DC HOMESTEAD DEDUCTION

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What You Need to Know About the DC Homestead Deduction

What is the DC Homestead Deduction? § 47–850. Residential property tax relief — Homestead deduction for houses and condominium units. Homestead Deduction and Senior Citizen or Disabled Property Owner Tax Relief: For the year 2017, this benefit reduces your real property’s assessed value by $72,450 prior to computing the yearly tax liability. The Homestead benefit is limited to residential property. To qualify: An application must be on file with the Office of Tax and Revenue; The property must be occupied by the owner/applicant and contain no more than five dwelling units (including the unit occupied by the owner); and The property must be the principal residence (domicile) of the owner/applicant. If a properly completed and approved application is filed from October 1 to March 31, the property will receive the Homestead benefit for the entire tax year (and for all tax years in the future). If a properly completed and approved application is filed from April 1 to September 30, the property will receive one-half of the benefit reflected on the second-half tax bill (and full deductions for all tax years in the future). Homestead Deduction application. [PDF] Senior Citizen or Disabled Property Owner Tax Relief When a property owner turns 65 years of age or older, or when he or she is disabled, he or she may file an application immediately for disabled or senior citizen property tax relief. This benefit reduces a qualified property owner’s property tax by 50 percent. If the property owner lives in a cooperative housing association, the cooperative will supply and collect the applications. The following guidelines apply: The disabled or senior citizen must own 50 percent or more of the property or cooperative unit; The total federal adjusted gross income of everyone living in the property or cooperative unit, excluding tenants, must be less than $128,950 for the prior calendar year; and The same requirements for application, occupancy, ownership, principal residence (domicile), number of dwelling units, cooperative housing associations and revocable trusts apply as in the homestead deduction. Tax Deferral For Low-Income Senior Property Owners And Low-Income Property Owners Effective October 1, 2014, low-income seniors may defer real property taxes, past due and prospective, at either 6% interest or no interest, depending upon age, income and length of residency.  OTR has devised a form with which the senior must apply. Application For Tax Deferral For Low-Income Senior Property Owners And Low-Income Property Owners FP-100 Homestead Deduction, Senior Citizen, and Disabled Property Tax Relief Application/Reconfirmation Homestead and Senior Citizen Tax Benefit Appeal Application FP-105 Cancellation of Homestead Deduction – Senior Citizen/Disabled Tax Relief and Fill-in Homestead Reconfirmation Audits Co-op Housing and Property Transferred to a Trust

Who Qualifies?

To qualify the homestead and receive the deduction, the individual shall complete and file with the Mayor an application in a form prescribed by the Mayor. The individual shall certify, under penalty of perjury, the information provided on the application form and the application form shall be filed in the manner prescribed by the Mayor. The Mayor may require the individual to provide any information which the Mayor considers necessary, including all taxpayer identification numbers of the individual, any other owner, any person with legal or equitable title, and any person in the household of the individual. The Mayor may also require the individual, any other owner, any person with legal or equitable title, and any person in the household of the individual to supply information after the homestead has been granted to determine whether the real property remains a homestead and entitled to the deduction.

Timetable

If a properly completed and approved application is filed during the period October 1 through March 31 of the tax year, the real property shall receive the deduction for the entire tax year. Notwithstanding subsection (a) of this section, if a properly completed and approved application is filed during the period April 1 through September 30, the real property shall receive 1/2 of the deduction for the second installment only.

Other Provisions

An individual may only claim one lot as a homestead. If a homestead comprises more than one lot, the deduction may only be applied against the estimated market value of one lot and the other lots shall not receive the deduction. Only one person in a household shall be entitled to claim a homestead in the District.  The real property tax bill shall indicate whether the real property is receiving the deduction.

Trusts and the DC Homestead Deduction

In the case of property transferred to a trust, the property may qualify for the DC Homestead Deduction benefit if: The property was eligible for the Homestead benefit before the transfer; The property is transferred to a revocable trust; The transfer is not for money (or other consideration); and The property remains the principal place of residence of the applicant/transferor/trustor before and after the transfer.

Cooperatives and the DC Homestead Deduction

To qualify for the DC Homestead Deduction in the case of a cooperative housing association, the unit must be occupied by the shareholder (or member) as his/her principal residence, and the benefit is granted to the cooperative (which will supply and collect the applications). Co-op units are not owned by the shareholders so the corporation gets the deduction.

Procedures for DC Homestead Deduction Filing

Title companies provide the application form for the buyer to complete at settlement, then file it with the rest of the recordable documents as an accommodation. But in 2010, the Homestead Unit of the OTR created a new “supporting documentation” requirement compelling the homebuyer to provide a DC driver’s license copy, a DC voter registration card, and a copy of first 2 pages of their DC income tax return. Obviously, not all homebuyers can comply with these requirements, especially those who are just moving to the District. The OTR states that the buyer will have 30 days from settlement date to register to vote, obtain a DC driver’s license and register his/her car in DC, and file with his/her employer a new DC Tax Form D-4 (Employee Withholding Allowance Certificate). Most DC title companies will continue to file the application for buyers at settlement, but be sure to furnish your title officer with the required documentation within 30 days of settlement in order to ensure you will qualify for the benefit. DC Homestead deduction information  DC real estate tax forms
The DC Homestead Deduction can be updated annually. Check for updates at the DC Office of Tax and Revenue

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Information is believed to be accurate, but not guaranteed. Subject to change without notice. Realtors are not CPAs or attorneys and are not permitted to give tax or legal advice or interpretations. Refer to a tax or legal professional for all related matters. Any information provided on this site pertaining to such issues is not intended as tax or legal advice and is provided solely for the purpose of illustration. Resources cited are believed to be accurate but are not guaranteed and are subject to change without notice. The Isaacs Team LLC, it successors and/or assignees/affiliates accept no responsibility or liability for the content herein.
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