DC Homestead Deduction
It’s a significant property tax deduction for those who qualify. Think that’s you? Read on to find out.
What is The DC Homestead Deduction?
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 your application is filed from October 1 to March 31, the property receives the Homestead benefit for the entire tax year and all tax years going forward. If filed from April 1 to September 30, one-half of the benefit reflected on the second-half tax bill will be realized, with full deductions for subsequent tax years.
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.
Bullet Points
- Meet required qualifications
- Apply with the OTR
Caren L
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Homested 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 The Deduction
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.
Homestead Deduction and Cooperatives
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.
Homestead Deduction and Trusts
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.
How To File
Effective October 1, 2021New E-Mandate for filing Homestead Benefit Applications (ASD-100) Here
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.
Paper Filing Method
The Homestead, Senior Citizen and Disabled Property Tax Relief Application can also be filed using the paper form by requesting a waiver from the electronic filing requirement. If waiver is granted, the application can be obtained through Customer Service by calling (202) 727-4TAX (4829).
- Homestead and Senior Citizen Tax Benefit Appeal Application
- Homestead Reconfirmation Audits
- Statement of Income
For assistance, please contact OTR’s Homestead Unit at MyTax.DC.gov.
Homestead Deduction Updates
Additional Programs & Updates
Updates
These tax changes took effect October 1, 2022, unless otherwise noted, for the following tax types:
- Seniors and Individuals with Disabilities Real Property Tax Increase Limit Amendment Act of 2022: The senior citizen assessment cap credit limits taxable assessment increases to 2 percent, beginning with TY 2023 (the current taxable assessment increase limit is 5 percent). The increase in the amount of the benefit will be reflected beginning with the first half TY 2023 real property tax bill. It’s automatic for seniors/disabled individuals who are already receiving the tax benefit.
- Disabled Veterans Homestead Exemption Amendment Act of 2022: A $445,000 homestead deduction (deducted from the assessed value) has been established for individual real property owners who have a total and permanent disability resulting from a service-incurred condition or are paid at the 100 percent disability rating level as a result of unemployability. The benefit is subject to the Senior/Disabled Tax Relief household income threshold, currently $139,900 for TY 2022. The veteran must have obtained certification of eligibility from the DC Office of Veteran’s Affairs.
- Tax Abatements for Housing in Downtown Act of 2022: Tax abatements have been established for certain real property undergoing a change of use to provide at least ten housing units. For each property meeting the requirements, the real property tax shall be abated in an annual amount per residential square foot for a maximum of 20 years, subject to total program annual ceiling limits.
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