DC Homeowners’ Property Taxes Remain Lowest in the Regionby Katie Kerstetter | February 27th, 2009 | PDF of this report
This week, District homeowners will receive their assessments for 2010 and their property tax bills for 2009. The new assessments are expected to decline modestly, after increasing significantly over the past several years. The new assessments won’t impact homeowners’ tax bills until next year, because this year’s bills are based on last year’s assessments. Yet even though 2009’s tax bills are based on a period when average assessments were rising, this analysis shows that property tax bills have decreased or risen only moderately for many homeowners in recent years.
DC homeowners continue to enjoy the lowest average property tax bills in the region, largely due to property tax relief policies implemented in recent years. These policies include a Homestead Deduction increase from $30,000 to $67,500; a 10 percent cap on annual increases in taxable assessments; and an 11-cent property tax rate cut. The District also adopted a “calculated rate” provision that decreases the tax rate if property tax collections reach a certain target.
As a result of these measures, most DC homeowners have seen their tax bills fall – or increase only modestly – over the past four years.
- In 2008, DC homeowners paid lower property taxes on average than homeowners in surrounding counties. Among homes with an average sales price of $500,000, DC homeowners paid an average tax of $2,725, compared to $3,504 in Montgomery County, $4,752 in PG County, and over $4,400 in Arlington and Fairfax counties. (2008 is the most recent year for which comparable data are available.)
- More than one-third of all District homeowners have lower property taxes in 2009 than they did in 2005. An additional 38 percent of DC homeowners have seen their tax bills grow less than five percent per year since 2005.
- DC’s homeowner property tax rate is lower than most neighboring counties. Only Arlington County, with a property tax rate of $0.848 per $100 of assessed value, is lower than the District’s rate of $0.85 per $100 of assessed value. On average, DC’s property taxes are lower than Arlington’s, however, because Arlington does not have a Homestead Deduction or property tax cap. Moreover, Arlington County’s property tax rate is expected to rise this year, which would make DC’s rate the lowest in the region.
- Taxable assessments remain much lower than full assessments for many homeowners. In 2009, the typical DC homeowner’s taxable assessment – the assessment to which the tax rate is applied – is only 54 percent of the full assessed value of the home.
The District’s property tax relief has provided significant benefits to homeowners across DC; additional, broad-based tax relief does not appear to be needed. Future property tax relief should focus on low-income renters and homeowners. To this end, the DC Council recently introduced legislation to improve the District’s Homeowner and Renter Property Tax Credit, also known as Schedule H. This credit provides assistance to households with high property tax bills relative to their income. However, the credit’s income eligibility level and maximum benefit have not been changed in nearly 30 years, and complex eligibility rules contribute to a participation rate of just 19 percent.
This report highlights property tax trends for DC homeowners, including detailed data on property taxes at the neighborhood level.
 The Homestead Deduction lowers the amount of the home’s assessment that is used to calculate a home’s real property tax.
 For more information about Schedule H, see: Clark, Lindsay, “Property Tax Relief for DC’s Lowest-Income Residents: Improvements Needed in DC’s ‘Schedule H’ Credit,” DC Fiscal Policy Institute, April, 8, 2008, http://dcfpi.org/?p=152.