DC HOMESTEAD DEDUCTION
We love this for you! It's a significant property tax deduction for those who qualify. Is that you? Read on to find out, and be sure to reach out if you have questions, or you're ready to buy DC real estate!
HOMESTEAD DEDUCTION
This benefit reduces your real property’s assessed value by $84,000 (savings of $714.00) 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.
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 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.
TRUSTS AND THE 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.
WHAT ABOUT 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.
HOW TO FILE THE DC HOMESTEAD DEDUCTION
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
HERE'S THE APPLICATION
ADDITIONAL PROGRAMS
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.
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 Tax Year 2021 total federal adjusted gross income of everyone living in the property or cooperative unit, excluding tenants, must be less than $149,400 for 2023; 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.
Did you receive a reconfirmation notice and questionnaire from Tax Management Associates (TMA)? Click here to learn more.
TAX DEFERRAL FOR LOW-INCOME SENIORS AND OTHERS
- 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
- FP-105 Cancellation of Homestead Deduction – Senior Citizen/Disabled Tax Relief
- Homestead Reconfirmation Audits
- Co-op Housing and Property Transferred to a Trust
DISABLED VETERAN HOMESTEAD DEDUCTION
Effective October 1, 2022, residential real property owned by a veteran who has been classified by the Department of Veterans Affairs as having a total and permanent disability as a result of a service-incurred or service-aggravated condition or is paid at the 100% disability rating level as a result of unemployability, is eligible for reduction in assessed value of $445,000, provided that:
- The property must be occupied by the disabled veteran and contain no more than five dwelling units (including the unit occupied by the owner);
- The property must be the principal residence of the disabled veteran;
- The disabled veteran must have at least 50% ownership of the property as shown by deed;
- The disabled veteran must be domiciled in the District; and
- Total household income cannot exceed the limit applicable to Senior/Disabled Tax Relief, currently $149,400 TY 2023.
- If a properly completed and approved application is filed from October 1 to March 31, the property will receive the Veterans Homestead Deduction for the entire tax year (and for subsequent tax years, provided that the property continues to qualify).
- If a properly completed and approved application is filed from April 1 to September 30, the property will receive one-half of the deduction reflected on the second-half tax bill (and for subsequent tax years, provided that the property continues to qualify).
- Properties receiving the Disabled Veterans’ Homestead Deduction are not eligible for the Homestead, Senior Citizen/Disabled Tax Relief or tax cap credit.
- Cooperative properties are also not eligible for this deduction.
Applications must be submitted using the online form:https://communityaffairs.dc.gov/page/disabled-veterans-homestead-exemption-application.
