Loss of Homestead Deduction - Rental Property

[Anonymous]

DH and I are considering renting out our current SF home and buying another to live in. Any idea how much DC property taxes will increase once we are no longer eligible for the Homestead Deduction on the rental property?

[Anonymous]

You should be able to find that info on line in the real property tax database via Dc.gov.

[Anonymous]

I think it's only 67,500 deduction. So a few hundred bucks? Too lazy to look it up but google dc office of real estate. It's right there.

[Anonymous]

It's not just the deduction that you'll lose though. the homestead deduction also prevents your property taxes from rising beyond a certain percentage each year. if you no longer claim the homestead deduction your taxes will increase to that of the full assessed value. This could be thousands depending on when you bought the home and the difference between the taxable and assessed value.

[Anonymous]

Look up your address here:

https://www.taxpayerservicecenter.com/RP_Search.jsp?search_type=Assessment

You'll pay tax on the total value. You'll no longer get the homestead deduction or the tax assessment credit which is probably worth a lot more.

[Anonymous]

It just changes assessed value by $67.5k when taxes are computed: http://otr.cfo.dc.gov/otr/cwp/view,a,1330,q,594163.asp

[Anonymous]

We innocently neglected to inform the DC Tax and Revenue Service that we had moved and were renting our house. Got hit with 5 years of back taxes and penalties.

The penalties were far worse than the extra taxes -- the bill for 2009 was just over $1,400, mostly penalties. Our house is assessed for about half what it's "worth" on Zillow, so I doubt they bumped the assessment. That would have made the bill a lot worse.

My advice: Don't forget to tell them you're moving out. The only thing worse than paying taxes to the DC government is paying penalties.

[Anonymous]

Anonymous wrote:We innocently neglected to inform the DC Tax and Revenue Service that we had moved and were renting our house. Got hit with 5 years of back taxes and penalties.

The penalties were far worse than the extra taxes -- the bill for 2009 was just over $1,400, mostly penalties. Our house is assessed for about half what it's "worth" on Zillow, so I doubt they bumped the assessment. That would have made the bill a lot worse.

My advice: Don't forget to tell them you're moving out. The only thing worse than paying taxes to the DC government is paying penalties.

+1 Even worse, we were NOT claiming homestead on our much pricier new house, during the same period we had it claimed on our condo, and OTR would not let us retroactively claim it on the house, so we got screwed twice.

[Anonymous]

Anonymous wrote:It just changes assessed value by $67.5k when taxes are computed: http://otr.cfo.dc.gov/otr/cwp/view,a,1330,q,594163.asp

Yes, but you also don't get the tax assessment credit anymore. That could be worth a LOT more, depending on how long you have lived in the house.

[Anonymous]

OP here. thanks for all advice. Does the assessment that appears on you semi-annual tax bill reflect the $67.5k reduction, or is it the full assessment amount?

[Anonymous]

*your*

[Anonymous]

Anonymous wrote:OP here. thanks for all advice. Does the assessment that appears on you semi-annual tax bill reflect the $67.5k reduction, or is it the full assessment amount?

Go to the database link I quoted at 10:11. It's very easy to work out from the figures there.