Not sure what the Senior Citizen or Disabled Property Owner Tax Relief is? The Senior Citizen or Disabled Property Owner Tax Relief program is meant to reduce property tax burdens for property owners who already are, or are turning, 65 years old or older, or for a property owner who has become disabled. This benefit reduces a qualified property owner’s property tax by 50%. To qualify for the benefit, you have to apply for it, but you must maintain the following qualifications:
- You (the senior citizen or disabled person) must own 50% or more of the property or cooperative unit.
- The tax year 2021 total federal adjusted gross income of everyone living in the property or cooperative unit, excluding tenants, must be less than $135,750.
- Per DC Code §47-863 you must maintain certain criteria for continued eligibility:
- The property must be the primary residence of the senior citizen or disabled person.
- The property cannot have more than 5 dwelling units.
If the property was owned by an individual(s) and transferred to trust, the the benefit will remain so long as:
- The property was eligible for the Senior Citizen or Disabled Property Owner Tax Relief benefit before the transfer.
- The property is transferred to a revocable trust.
- The trust is not for money (or other consideration).
- The property remains the principal residence of the applicant/transferor/trustor before and after the transfer.
Am I required to cancel my Senior Citizen or Disabled Property Owner tax exemption if I am renting the property?
Yes and no.
The yes: As long as the individual(s) or revocable trust that was granted the tax relief continues to meet the eligibility requirements (including living at the property and maintaining it as their primary residence), then you do not have to cancel the tax relief.
The no: If renting the property means that you no longer meet the eligibility requirements, then you must cancel the Senior Citizen or Disabled Property Owner Tax Relief benefit. By law, you have 30 days to notify the DC Office of Tax and Revenue of the change in status. Otherwise, severe penalties can be imposed.
If I remove the Senior Citizen or Disabled Property Owner Tax Relief, is it effective immediately?
If the property loses eligibility during the first half of the tax year (October 1 - March 31), the benefit is generally rescinded for the whole tax year. However, if a property loses eligibility in the second half of the tax year (April 1 - September 30), the benefit will generally be rescinded for the second half of the year.
Is there anything else I need to do or worry about?
Keep in mind that once the Homestead Deduction has been removed, your property tax bill will increase (as of 2021 this equals $641.50). You will want to make sure you budget for the change so you are not blindsided by the additional money owed.
Additionally, if you have a mortgage and the lender escrows a portion of your monthly mortgage payment to pay your property tax bill, you might want to let them know you are aware of the increase. The lender might tell you they cannot make the escrow change until they receive the next bill. If this is the case, make sure you save some extra money – you’ll need it to pay the bill the lender sends for the missing escrow amount before you make the mortgage payment.
Note: RentJiffy does not provide tax, legal, or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on, for tax, legal, or accounting advice. You should consult your own tax, legal, and accounting advisors before engaging in any transaction.