Home Owners’ Deductions and Tax credit available in DC

The Assessment Cap currently provides that a property may not be taxed on more than a 10 percent increase in the property’s assessed value each year. This credit does not reduce the assessed value of your property on the tax roll or the assessment notice, but it will appear as an automatic credit against your real property tax bill. 


First-Time Homebuyer Individual Income Tax Credit

This federal tax credit is available to first-time homebuyers in the District of Columbia. The credit is the smaller of:
  • $5,000, if single, married filing jointly, head-of-household, or qualifying widow(er) ($2,500, if married filing separately) or
  • The purchase price of the home.
In general, you may claim the credit if:
  • You purchased a main house during the tax year in the District of Columbia, and
  • You (and your spouse, if married) did not own any other main home in the District of Columbia during the 1-year period ending on the date of purchase.

Homestead Deduction

This benefit reduces your real property’s assessed value by $71,400 prior to computing the yearly tax liability.
The Homestead benefit is limited to residential property. To qualify:
  1. An application must be on file with the Office of Tax and Revenue;
  2. 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
  3. The property must be the principal residence (domicile) of the owner/applicant

Individual Income Property Tax Credit

The Individual Income Tax Credit reduces the DC individual income tax liability of eligible homeowners and renters by up to $1000. The total 2014 federal adjusted gross income (AGI) of your “tax filing unit” was $40,000 or less ($60,000 or less if you are age 70 or older).

Limited-Equity Cooperative Tax Fairness 

The assessed value of residential real property owned by LECs is the lesser of the following three approaches to value:
  1. The aggregate estimated market value of proprietary lease, stock, or other interests in the co-op association as of January 1 preceding the date of assessment, or
  2. If information is insufficient, the estimated market value of the property is assessed as if it were a condominium determined under the comparable sales approach multiplied by 70 percent, or
  3. The annual amount residents pay in carrying charges (excluding subsidies), divided by an appropriate capitalization rate as determined by OTR. If property ceases to be an LEC, then it will be assessed under either (1) or (2) above.
“Carrying charge subsidies” are any payments originating, directly or indirectly, with a federal or local government housing agency and used to supplement the monthly housing payments of a co-op member.

Lower Income Home Ownership Tax Abatement

Eligible homeowners, including non-profit organizations and shared equity investors, may receive a five-year tax abatement and be exempt from paying recordation and transfer taxes. The five-year period for the Lower Income Home Ownership Tax Abatement begins on October 1, after your deed has been recorded and you have previously applied for the abatement. To qualify, you must meet the following conditions:
  • The property must be owner-occupied;
  • The owner must meet the income level requirement; and
  • The property must be less than $356,000 in value

Lower Income, Long-Term Homeowners Tax Credit

The Lower Income, Long-Term Homeowners Credit was passed by the DC Council to ease the effect of rising assessments and taxes on low-income residents who have lived in their homes seven consecutive years or more.
The current requirements for receiving the credit are:
  • You must have owned and occupied the property as your principal residence for at least the last seven (7) consecutive years;
  • The property must be receiving the Homestead Deduction;
  • The total household income of all household members of your residence must not exceed the Household Income Limit Table listed in Section D on the Schedule L; and
  • Your application must be filed by December 31 of each year.

Metropolitan Police Housing Assistance Program

DC Metropolitan Police Department officers who are first-time homeowners and live in their homes may be eligible for a sliding-scale real property tax credit.

Property Tax Deferral

If your total household Adjusted Gross Income (AGI) is $50,000 or less, you may qualify for the low-income or low-income senior citizen property tax deferral. This program allows you to defer payment of increases in your property tax, or (if you are a senior citizen with household AGI of $50,000 or less) to defer your entire annual tax bill.
If you have lived in a Class 1 property for a year or more, and your tax is more than 10% higher than the previous year’s tax, you may defer payment on the amount over the 10%.
To be eligible for the property tax deferral program, you must file an application and meet the following conditions:
  • You must have owned your home for at least 1 year before the application date;
  • You must have occupied the home for the 12-month period immediately before the application date;
  • You must currently occupy the property;
  • The current year’s tax must be more than 10% higher than the previous year’s tax;
  • The total of all taxes deferred, plus annual interest of 8% accrued on the deferrals, must not exceed 25% of the property’s assessment for the real property tax year in which the deferrals are provided.
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:
  1. The disabled or senior citizen must own 50 percent or more of the property or cooperative unit;
  2. The total federal adjusted gross income of everyone living in the property or cooperative unit, excluding tenants, must be less than $127,100 for the prior calendar year; and
  3. 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

Effective October 1, 2014, 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.

Trash Credit

A trash credit deduction may be issued for owners of condominiums, cooperative dwelling units, or certain homeowners who pay for garbage collection instead of receiving city garbage service. The trash credit is $98 for 2011. In order to qualify, the following circumstances must be met:
  • The property must be either: 1) a single dwelling unit owned as a condominium; 2) a single dwelling unit that is owned by a member of a homeowner association; or 3) a cooperative dwelling unit.
  • The dwelling unit must be located in a condominium building or a cooperative housing association building with more than four dwelling units.
  • The housing association, condominium, and cooperative housing association must not receive trash collection services from the District of Columbia.
  • The property must be occupied by the owner and used for non-transient residential purposes.
Contact me for more info or contact the DC Tax and revenues office for more info

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