DC property tax bills will arrive soon, making this an excellent time to learn ways you may be able to save on property taxes or lessen your income tax burden. There are multiple tax credit and relief programs available to property owners in D.C., and if you aren’t aware of them, you might be leaving money on the table.
This article summarizes these programs and the eligibility requirements for each of them.
The Homestead Deduction
Eligibility: You must own and live in the property for which you are applying. It also must be your primary residence and contain no more than five dwelling units — including the unit occupied by the owner — to be eligible.
The deduction decreases your property’s assessed value for tax purposes by $70,200. You must file an application with the Office of Tax and Revenue. If you file by March 31, the deduction will cover the entire year's taxes. If you file between April 1 and Sept. 30, it will cover the second half of the year.
The Assessment Cap Credit
Eligibility: Property owners in D.C.
The credit was designed by the Office of Tax and Revenue to mitigate the effects of skyrocketing home prices on D.C. property owners. This program limits the assessed value on which your home may be taxed. It does not decrease the actual assessed value of your property. Instead, it is reflected as a tax credit on your property tax bill. The program does not allow a property to be taxed on more than a 10 percent increase in assessed value from year to year. Even if your property values increase significantly, you will not be taxed on more than a 110 percent of the last tax year's assessed value (prior value plus a 10 percent increase).
Individual Income Property Tax Credit
Eligibility: If your household’s overall income is less than $40,000, you could be eligible for the Individual Income Tax Credit.
The credit reduces your individual income tax liability by up to $1000 if you are a homeowner or renter. To qualify for this credit, you need to submit both Form D-40 (Individual Income Tax Return), and Schedule H (Property Tax Credit Form) to the Office of Tax and Revenue.
Historic Homeowner Grant Program
Eligibility: The Targeted Historic Preservation Assistance Amendment Act of 2006 is a grant program for low- and moderate income households with properties in the following historic districts: Anacostia, Blagden Alley/Naylor Court, Capitol Hill, Fourteenth Street, LeDroit Park, Mount Pleasant, Mount Vernon Square, Mount Vernon Triangle, Shaw, Strivers’ Section, U Street, and Takoma Park.
The grant program will sponsor repairs, rehabilitation, and structural work on historic properties, but work that will improve the appearance of the property, especially if it is visible from public streets, is encouraged.
The application involves a two-part process. The first part requires homeowners to provide photographs of their house and a description of the repairs they plan to make. After the Historic Preservation Office (HPO) reviews applications for eligibility purposes, homeowners who are eligible will receive the second part of the application and a detailed scope of the necessary work for their properties from HPO. To submit the second part of the application, homeowners must provide thorough household financial information and bids from general contactors for the work to be done on the property. A committee appointed by the Director of the Office of Planning and the Chairman of the Historic Preservation Review Board will review and select the applications. The DC Office of Planning has more information about the Historic Homeowner Grant Program.
For more details about additional property tax credits and programs in D.C., see: http://otr.cfo.dc.gov/page/other-credits-and-deductions