DC Real Property Assessment Cap Credit
Understanding the property tax assessment process can be a bit tricky. Specifically, it can be difficult to understand the difference between an assessed value and a taxable assessed value. Part of the confusion has to do with the Assessment Cap Credit. Here is an example of a recent question on this topic:
Question: On my DC Tax bill, the assessed value is listed as $388,500, but my taxable assessment was only $291,200, a difference of $97,300. What accounts for this difference?
Answer: The bulk of the difference has to do with the Homestead Deduction, which reduces the real property taxable assessment by $72,450. However, there is a second benefit to the Homestead Deduction that receives a lot less attention, the Assessment Cap Credit. This credit provides that the taxable assessment cannot increase more than 10% per year. The credit is not applied against the assessed value, but it is used to reduce the taxable assessed value. In the above question, the additional credit that reduces the taxable assessment by a further $24,850 is the assessed cap credit. Further, based on the above numbers, next year’s taxable assessment cannot exceed $320,320 ($291,200 plus 10%), regardless of the assessed value (assuming of course that the property is still registered as a homestead).
The District of Columbia Office of Tax and Revenue has great information on their website that explains in detail the real property process and the credits available.