Wednesday, July 28, 2010

Modifications to the Homestead Deduction Application Process in DC

Thank you to our DC and Montgomery County, MD partner Paragon Title for this information:

The District of Columbia Office of Tax and Revenue has changed the procedure for filing Homestead Deduction Applications. The Homestead Deduction results in a $67,500 decrease in the taxable assessment and places a 10% cap on the annual amount that a tax assessment can increase for qualified owner occupied properties in the District of Columbia. As a result of this change, homeowners will be responsible for filing the application themselves and your title company or title attorney will no longer be able to file it for them a part of the closing. The procedure for filing the Application is not difficult, but the requirements must be met in order for a homeowner to receive the benefit of the Deduction.

In an effort to ensure that anyone who receives the Homestead Deduction actually qualifies, DC has mandated that the Applicant satisfy the following specific requirements:

  1. The Applicant must have actually moved into the property.
  2. A completed Application must be submitted with the required indicia of domicile: (a) DC Driver’s License with the subject property address on it. (b) DC Car Registration with the subject property address on it. (c) DC Voter Registration. (d) Proof of Paying Income Taxes in DC. i. Current Residents - DC Tax Return ii. New Residents - Pay Stub showing DC taxes withheld.

To ensure that the Application will not be rejected, the Applicant should make every effort to include all of the above indicia that apply. DC has suggested that if the Applicant does not attach a DC Driver’s License or a Car Registration because they do not own a car and/or drive, they should state “I do not drive” and/or “I do not own a car.”

If a DC Voter Registration is not attached and the Applicant is not registered to vote in another state, the application should specify “I do not vote.” The Applicant cannot have a voter registration in any other jurisdiction.

The Homestead Department prefers that the Application and supporting documentation be emailed to Applicants cannot take a Homestead Deduction on more than one property. Purchasers who are currently receiving the Homestead Deduction on another DC property must include a “Cancellation of Homestead Deduction” form in that same email. A link to this form can be found on the left side of this Bulletin. Once the application has been submitted, the Homestead Department will acknowledge receipt by email.

Here are some helpful links for DC residents:

ONLINE CHANGE OF ADDRESS: This site allows users to update their address for both their Driver’s License and Car Registration.

ONLINE CHANGE OF VOTER REGISTRATION: This site is the DC Board of Elections & Ethics where homeowners can register to vote in the District.

HOMESTEAD APPLICATION AND CANCELLATION DOCUMENTS: This link directs you to the Real Property Forms page on the DC Office of Tax and Revenue’s site. Under the heading “Tax Relief” you will find all of the relevant Homestead Documents.,a,1330,Q,593974.asp

Flickr photo by alykat