How to qualify for DC Homestead Deduction

Real estate agents and homebuyers often ask us about DC Homestead Deduction, a program that offers tax relief to District homeowners. Who qualifies and what are the benefits? 

As a complimentary service, Federal Title will complete and file the application as part of the closing services we provide.

Who Qualifies?

• An owner of a residential (1-5 units) property who occupies the property as a principal residence.
• Must be a resident of the District of Columbia. Proof of residence may include obtaining a DC driver’s license, registering to vote, registering a vehicle, and filing of DC tax returns.
• Generally, must be a US Citizen. Some G-4 visa holders may qualify as residents by providing a letter from their international organization employer.

What are the specific benefits?

There are two main benefits to obtaining the Homestead Deduction. First, for the purpose of computing your yearly tax liability, it will reduce your real property’s assessed value by $85,000. At a tax rate of $0.85 per $100 of assessed value. Second, you are entitled to an assessment cap such that your property may not be taxed on more than a 10% increase in the property’s assessed value each year.

When does the Homestead Deduction take effect?

If a properly completed and approved application is filed from October 1 to March 31, the property will receive the Homestead Deduction 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).

When should I apply for the benefit?

You should apply at the time of your closing or shortly thereafter. Federal Title can help you complete your application at the time of closing and, as a complimentary service, file the application on your behalf.

What if I have a Homestead Deduction on another property?

You cannot maintain a Homestead Deduction on a non-owner occupied property. If you no longer occupy a property that currently receives the Homestead Deduction benefit, you must notify the agency when eligibility ceases. View the Cancellation of Homestead Benefit form.

Information deemed reliable but not guaranteed. | Updated 18 March 2021