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The 5 Things To Know About DC Property Taxes

by UrbanTurf Staff

The 5 Things To Know About DC Property Taxes: Figure 1

With all the news surrounding property taxes over the past few weeks, UrbanTurf wanted to put together a quick primer on the topic. As the widely-read Washington Post report makes clear, failing to pay your property taxes can result in consequences as dire as losing your home. While Mayor Gray has initiated a few programs to assist those who are delinquent, we wanted to outline a few things that will help navigate the process.

  1. Usable and occupied residential properties in DC are taxed at a rate of $0.85 per $100 of the assessed value (commercial, vacant and blighted properties are taxed at different rates.) An assessor determines the current market value of homes in the District, and property taxes may rise and fall based on the determined valuation.
  2. These days, if you take out a mortgage to buy a home, your property taxes are usually baked into the monthly payments. In these cases, your lender will divert a portion of your monthly payment to cover your tax bill. It is worthwhile, nonetheless, to check and make sure that if your monthly mortgage payments include property tax payments, your lender is indeed paying off your taxes.

    While your principal will be constant throughout the duration of a loan, your tax burden may vary slightly, depending on the assessed value of your home. So, some years you may have to pay more, others less.
  3. If you bought your home in cash, did not need to take out a loan or have paid off your home, you will receive a separate property tax bill from the city. In DC, you must pay property taxes twice a year, on March 31st and September 15th.

    You can pay your real property tax bill online or by mail. Instructions on how to do that can be found here.
  4. DC's Homestead Exemption can save owner-occupants a considerable amount of money. The exemption will deduct $69,100 from your property's assessed value when calculating the amount of property tax you must pay. To be eligible, the property must be your primary residence.

    There is another facet of the policy. For homeowners over the age of 64, the Homestead Exemption is even more valuable: senior citizens with an adjusted gross household income of less than $100,000 can have their property taxes reduced by 50 percent. This is particularly pertinent to those living in rapidly changing areas, where the property values and corresponding taxes may be significantly higher than they were when the older folks moved in.

    Interested parties must apply for the exemption through the District's Office of Tax and Revenue. You can follow links to the application here. If at some point the owner becomes ineligible, they must cancel the exemption or face monetary penalties.
  5. If a homeowner fails to pay their property taxes, penalties can quickly pile up. The penalty is 10 percent of your tax and the interest is 1.5 percent of the tax for each full or partial month your payment is late. Every year, the city sells off a number of their tax debts to parties who can then charge even more in fees and interest and eventually foreclose on the home. As the Post story outlined, when this happens, owners sometimes find themselves losing their homes to very small original debts.

    Mayor Gray's newest initiative is aimed at helping those who have fallen behind on their debts to navigate the system and set up payment programs. A new District employee, the Real Property Tax Ombudsman, will be the person to call when you need assistance with your property taxes.

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This article originally published at https://dc.urbanturf.com/articles/blog/the_top_five_things_to_know_about_property_taxes/7563

6 Comments

  1. C said at 6:16 pm on Tuesday September 17, 2013:
    Dear Urban Turf, are you sure about point #2 in this primer? I've not seen situations where your taxes are tied up in your monthly mortgage? I've only seen monthly mortgage payments and then the city delivers (twice per year) tax bills, as you stated. Is there a way to set up your monthly mortgage to cover the taxes? I thought mortgages were to a separate party and not where local taxes would go. Could you expand on this point or clarify this point, please. If you are talking about cooperatives or condos, maybe then the point #2 is correct but the article makes it sound as if it is applicable to any type of home and I haven't seen this to be the case. Thanks
  1. Rob said at 6:38 pm on Tuesday September 17, 2013:
    I believe they are referring to the fact that you mortgage company will collect (in one monthly payment) your PITI - principle, interest, taxes and insurance. The money for taxes and insurance are escrowed and then they will pay, on your behalf your insurance company bi-annually and your property taxes bi-annually as well. I always thought this was the standard.
  1. The Editors said at 6:39 pm on Tuesday September 17, 2013:
    C, Yes. Most lenders these days have borrowers pay into an escrow account, as part of their monthly payment, which covers property taxes and homeowners insurance. When property taxes are due, the lender pays them for you out of this account. Hope this helps. The Editors
  1. C said at 7:03 pm on Tuesday September 17, 2013:
    Thanks Rob and Urban Turf editors, I learned something. I thought that arrangement was only for the month for when someone buys a new property and what goes into escrow is used to pay the various amounts owed to different places. I did not think it was an ongoing thing.
  1. whoa_now said at 8:23 pm on Tuesday September 17, 2013:
    Is there a limit to how much your property taxes can go up? and or pay? If for instance my property taxes went up 150K over the course of one year...is their a limit on what I have to pay? otherwise its an additional 1200 dollars. oddly enough my code was poor94
  1. Mike said at 1:21 pm on Wednesday September 18, 2013:
    To whoa_now: I suspect you meant if your "property 'assessment' went up by 150k"... Property tax increases are capped at 10%. For example, if you paid $2500 in taxes the previous assessment period, your taxes can't increase by more than $250 regardless how high your property is assessed. That 10% cap is applied anew annually to help control annual tax increases any one person will experience.

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