New requirements for DC's Homestead Deduction

In this season of the World Cup, I’m sure most of us would consider it unfair to move the goal posts while the ball is in the air. Well, according to a recent announcement from the Homestead Unit within the DC Office of Tax and Revenue, moving the goal posts on homebuyers is a perfectly acceptable practice when it comes to qualifying for the DC Homestead Deduction.

As most of you know, the DC Homestead Deduction exempts the first $67,500 of assessed value from the tax rate, providing the homeowner a $573.75 annual savings on their real property tax bill. In order to qualify, the homeowner must be domiciled in the District of Columbia and submit the application with supporting documentation.

For years, Federal Title has provided homebuyers the complimentary service of filing the Homestead Deduction as an accommodation and without additional charge. In the past, without “supporting documentation,” our office has had the homebuyer complete the form and we physically file the form with the Office of Tax and Revenue.

New "supporting documentation" requirement now causing tremendous angst for homebuyers & title companies alike

To apply for the Homestead Deduction, you must:

  1. Be domiciled in the District of Columbia;*
  2. Answer all the questions in PART I, PART II and PART III;
  3. Sign and date the application in PART IV; and,
  4. Send this application with supporting documents (copy of DC Driver’s license, DC voter registration card, DC Income tax, etc.) to the Office of Tax and Revenue.

* Generally, you must meet the following four criteria to make the District your domicile:

  1. You must be living in the District;
  2. You must intend to make your home in the District for an indefinite period of time;
  3. You must completely abandon your previous domicile; and
  4. You must be physically present in the District at the time you intend to change your domicile to the District. Once you meet these four criteria, you should also do the following:
  1. Get a drivers’ license from the District;
  2. Register your car(s) in the District;
  3. Register to vote in the District; and
  4. Pay District income taxes.

Now, according to Thanh-Thuy “Twee” Nguyen, manager of the Homestead Unit, in order to qualify, the homebuyer will now be required to provide the following:

  1. Copy of DC driver’s license
  2. DC voter registration card
  3. Copy of first 2 pages of DC income tax return

And what if the homebuyer is a new arrival to DC?

Well, according to Ms. Nguyen, the homebuyer will have 30 days from settlement date to 1) register to vote; 2) obtain a DC driver’s license; 3) register his/her car in DC; and 4) file with his/her employer a new DC Form D-4 (Employee Withholding Allowance Certificate).

Federal Title will continue to file the Homestead Deduction form on behalf of the homebuyer at the time of closing. However, the homebuyer will be responsible for providing the new required documentation to our office prior to or at the time of closing so that Federal Title may file and qualify the homebuyer for the benefits.

Should the homebuyer be a new arrival to DC, then the homebuyer must provide the respective required documentation to our office within 30 days of closing so that Federal Title may properly submit application to the Homestead Unit.

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