Filing Taxes in DC: What Homeowners Need To Know

By DeBlanc + Murphy
March 25, 2024

Do you own a home in Washington, DC? If so, you can take advantage of valuable property tax deductions and credits that can put more money back in your pocket. Here’s what homeowners filing taxes in DC need to know.

Homestead Credit

The Homestead Credit is one of the most significant tax benefits available to homeowners in Washington, DC, because it significantly reduces the assessed value of your home, which could cut your property tax by up to half.

How to Qualify

You must occupy the property as your principal residence, which can contain no more than five dwelling units (including the unit you occupy).

You must also file a Homestead Deduction application with the Office of Tax and Revenue, which can be done online. If you prefer to file by paper, you can request a waiver from the electronic filing requirement and request a paper form by calling the Office of Tax & Revenue at (202) 727-4TAX (4829).

Timelines to Be Aware Of

If you apply for the homestead benefit from October 1 to March 31 and it’s properly completed and approved, it covers the entire tax year and subsequent tax years.

For applications filed from April 1 to September 30, coverage is for one-half of the benefit reflected on the second-half tax bill, followed by total deductions for all subsequent tax years.

Mortgage Interest Deduction

You can deduct the interest paid on your mortgage loan from your taxable income. The savings can be especially significant in the early years of homeownership when your mortgage interest payments are higher.

What Qualifies?

The property must be your primary residence and have basic living accommodations such as sleeping quarters, a cooking area, and bathroom facilities. It can be a house, co-op, apartment, condo, mobile home, houseboat, or other property. It must also be listed as collateral on the loan.

Second homes qualify, too, although you can only deduct interest on one of them if you have more than one.

To claim the deduction, you must itemize your deductions, including mortgage interest, on Schedule A (Form 1040).

Property Tax Deduction

Property taxes can be deducted from your federal taxable income, which can be particularly beneficial if you pay a high property tax rate.

What Qualifies?

Property taxes can be deducted for a primary home, co-op apartment (although special rules apply), vacation homes, vehicles, and boats.

Exclusions include, among other instances, taxes paid on property you don’t own, taxes paid on commercial or rental property, and taxes paid on transferring the sale of a house.

Energy Efficient Home Improvement Credit

Have you installed solar panels and energy-efficient windows or made other energy-efficient improvements to your home? If so, you may be eligible for various tax credits and incentives.

What Qualifies?

The home must be located in the United States and be an existing home that you made improvements to or added onto. It cannot be a new home. Additionally, in most cases, it must be your primary residence. Also, if you use the property solely for business purposes, you won’t be able to claim the credit.

Want Assistance?

Owning a home in Washington, DC, offers numerous tax advantages, and we can help you leverage them. Hiring a CPA to help you file your taxes is smart because our team knows how to ensure you get all the deductions and credits you deserve. In short, we help minimize your tax liability and maximize your refund.

Ready to connect with us? Book a meeting with an advisor today.

Large plus sign

Get On The Right Path. Everything else gets easier when you have a dedicated team of top CPAs on your side.