DC Homestead Deduction Increases

Posted by on Friday, July 5th, 2013 at 6:11pm.

The DC Homestead Deduction went up earlier this year. When we last wrote about the tax benefit in 2012, it was $67,500. But now the DC Office of Tax and Revenue (OTR) has increased the deduction to $69,100.

Periodically, OTR will increase the DC Homestead Deduction based on cost of living adjustments. For historical reference, the deduction was $60,000 in 2006 and 2007. In 2008, it increased to $64,000. 

The DC Homestead Deduction benefits District residents who own and occupy property. It helps save you money in two ways -- by reducing your annual tax liability and providing a cap on the assessed value of your property.

The latest increase in the DC Homestead Deduction will reduce the annual property tax bill of qualified owners. It works by reducing the assessed value of the property by $69,100. Since the current tax rate is $0.85 per $100, the $69,100 Homestead Deduction will reduce your property bill by $587.35.

In order to qualify, the property owner must file an application with the Office of Tax and Revenue. In addition, the owner must occupy the home as his principal residence. Finally, the property must contain no more than five dwelling units (including the owner’s).

If your property qualifies, there is no reason not to complete an application.The application is just a single page, which is available online.

If your application is approved between October and March, the property will receive the DC Homestead Deduction for the entire tax year. But forms filed from April through September, receive half of the benefit since they only pay a single tax bill that first year. 

Regardless of when you apply, your DC Homestead Deduction applies to all subsequent tax years. So the earlier you apply, the sooner you can reap the benefits. However, if you move or change ownership of the property, you are required to complete a cancellation form to end the deduction.

Qualified owners should reduce their tax bills and apply for the DC Homestead Deduction.

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