DC HOMESTEAD DEDUCTION

What is the DC Homestead Deduction and how does it benefit you? § 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).

Who Qualifies For The DC Homestead Deduction?
  • An owner-occupant of one residential property (1-5 units). Must be a principal residence;
  • Resident of the District of Columbia. Proof of residence may include a DC driver’s license, voter registration, vehicle registration, or DC tax returns;
  • Must be a US Citizen in most cases. Some G-4 visa holders may qualify as residents by providing a letter from their international organization employer.
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.
More DC Homestead Qualifications
Homestead 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.

Cap On DC Homestead Deductions

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.

Filing The DC Homestead Deduction

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. 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.

Updates To The DC Homestead Deduction
The DC Homestead Deduction may be updated annually. Check at the DC Office of Tax and Revenue
Homestead Deduction Application
If you are purchasing a home in the District of Columbia and you qualify for the DC Homestead Deduction, your title company will complete and submit the form for you following settlement.
Homestead Deduction application
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% 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;
  • 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
  • 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.
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