What Your Property Tax Bill Means

It’s tax season, and not only are you responsible for income and other taxes, but it is time to examine your real estate taxes for any properties you own.  If you live in the District of Columbia, you should have recently received a Notice of Proposed Real Property Assessment for Tax Year 2017.  This notice provides detailed information on the assessed value of your property and how that assessment will affect your property taxes going forward.

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Your notice from the Office of Tax and Revenue will look like this.

According to the Office of Tax and Revenue, 

“A total of 196,584 taxable and exempt real properties have been reassessed to reflect current market values as of January 1, 2016. Property owners receiving new assessment notices will not be taxed on the new assessed value until March 2017.

The District’s real estate market remains steady as the average increase in residential properties was 6.60 percent. The commercial market also shows value increases of 5.11 percent.”

While the average increase in residential properties was 6.60 percent, many neighborhoods in D.C. saw considerably higher increases in the assessed values of their property.  

This map shows the breakdown of increases in assessed property values by neighborhood.  Red neighborhoods increased in value the most, while blue neighborhoods increased the least.  

Today we’re going to break down:

• What this Notice means,
• How you can determine your property’s assessed value and how much you will owe in taxes as a result,
• How you can appeal this Notice, and
• What programs and benefits are available to help reduce your property taxes in the District of Columbia.  

How the Assessed Value Affects Your Property Taxes

As we discussed in our February newsletter, your tax bill is determined according to assessed value of your property.  The rate that the District of Columbia taxes property owners is $0.85 in taxes for every $100 of assessed property value.

To see what your assessed property value is, look at the section of your Notice that contains the appraiser information (the person who determined the value of your property) and the current and proposed values.  

The red circle shows where you can find the 2016 current value that the District of Columbia is using to assess your real property taxes.

The blue circle shows where you can find the Proposed Assessed Value, which is the amount that the District will use to determine your tax bill in 2017.

Using the stated property tax rate, if your home’s 2017 Proposed Assessed Value is $400,000, your property taxes (without any homestead benefit or tax cap, discussed below) would be $3,400 next year ($400,000 x 0.85 x 0.01 = $3,400).  

To calculate your own 2017 taxes, you can use the formula below:

(2017 Proposed Value) x 0.85 x 0.01 = 2017 Property Tax Bill

This calculation is just an estimate.  Your actual tax bill may be affected by the homestead benefit, senior citizen/disabled program, and/or cost of living adjustments.   

Homestead Benefit

If you live in the District of Columbia and your home is your principal place of residence, you may qualify for the District’s homestead benefit.  The homestead benefit currently gives qualifying residents a $609.45 tax deduction, which also may increase for cost of living adjustments in the future.  

In addition, if you are a senior citizen or a disabled resident, you may also qualify for an additional tax reduction, usually 50%.  Additional requirements include a limit on your household’s federal adjusted gross income (less than $127,600, which may be adjusted for cost of living changes) and you must own at least 50% of the property.  

Tax Cap

If you receive the homestead deduction, there is also a tax cap that may apply to your property tax bill.  The tax cap limits the increase in your assessment to 10% over the prior year’s assessment.  If you are eligible, you will receive either the tax cap or the homestead deduction, whichever is more favorable to your tax bill (but the taxable assessment must be at least 40% of your property’s actual assessment).  

How to Appeal the Notice

If you own property (or are a life tenant or have a lease with a term of at least 30 years), you may appeal your property’s proposed assessed value for Tax Year 2017.  Make sure to file any appeal by April 1st of this year and visit the Office of Tax and Revenue’s website for more information. You may want to contact an attorney to find out your rights and determine whether you qualify for any of the tax reduction programs.

Do I have to pay the bill myself?

If you have a mortgage on your property, your bank likely makes your property tax payments. This does not mean that you should not appeal what you believe to be an unfair assessment – the bank pays the bill, but they collect the money from you as “escrow payments.”