by Ed Lazere
PDF of this Report
In 2005, the DC Council approved several provisions to provide property tax relief to homeowners facing rising assessments. This includes an increase in the Homestead Deduction from $38,000 to $60,000, following a proposal from Mayor Williams. The Council also reduced the residential property tax rate from 96 cents per $100 of assessed value to 92 cents, the first rate cut for homeowners since 1990.[1] Finally, the Council lowered the 12 percent cap on annual increases in a property’s taxable assessment to 10 percent.
DC homeowners will receive substantial property tax relief as a result of these measures. Nearly four of five DC homeowners will pay less in property taxes in 2006 than they paid in 2005; for the remaining households, 2006 tax bills generally will be no more than five percent higher than 2005 bills.
The tax reductions adopted in 2005 are so substantial that 2007 tax bills for nearly half of all homeowners will remain lower than their 2005 bills. These are significant findings, considering that property assessments increased by double-digit amounts in nearly every DC neighborhood this year.
- The typical homeowner paid about $1,400 in property tax in 2005. In 2006, the median property tax bill will be $1,300, or $100 less than in 2005.[2]
- For 71,000 of 89,000 DC homeowner households ‘ 79 percent ‘ property tax bills in 2006 will be smaller than 2005 bills.
- An additional 19 percent of DC homeowners will face an increase of no more than five percent in their tax bill.
- Homeowners throughout DC will face significant property tax relief. In 43 of DC’s 56 property tax neighborhoods, the median tax bill will be lower in 2006 than in 2005. (More information on property taxes at the neighborhood-level is provided below.)
These findings suggest that the adopted property tax relief measures will fully or significantly offset the impact of rising assessments for virtually all DC homeowners.
The impact of these tax reductions will keep tax bills at reduced levels in future years as well. Even if all homeowners face a maximum 10 percent increase in their tax bill in 2007, nearly half will continue to have smaller bills than in 2005.
- If tax bills increase 10 percent between 2006 and 2007 for all homeowners, the median tax bill in 2007 will be $1,430. This is just two percent above the median property tax bill of $1,400 in 2005. In other words, property taxes for the typical DC homeowner will remain essentially unchanged between 2005 and 2007, despite tremendous increases in home values during this period.
- For 46 percent of DC homeowners ‘ some 40,000 households ‘ property taxes in 2007 will remain lower than their 2005 property tax bill.
- An additional 34 percent of homeowners will have 2007 tax bills that are no more than 10 percent higher than their 2005 tax bill, representing an increase of less than five percent per year between 2005 and 2007.
- For most of the remaining 20 percent of DC homeowners, the property tax increase between 2005 and 2007 will be no more than seven percent per year.
Click here to read the full report with tables.
End Notes:
[1] The rate reduction also applies to rental residential properties.
[2] The figures in this analysis do not include the impact of the so-called “triennial fix” that was also adopted in the 2006 budget. If this provision, which reduces property taxes for two-thirds of DC household, were included, it would show that 2006 tax bills are even lower than reflected here.