Looking for ways to reduce your property taxes? You’ve come to the right place.
In Washington D.C., the effective property tax rate is 0.55%, which is significantly lower than the national average of 1.1%. But since property values in D.C. are so high, the actual median dollar amount a D.C. resident pays is $3,699—higher than the U.S. average of $2,690.
Montgomery County’s effective property tax rate is also lower than the national average at 0.99%, but residents face a similar problem. High property values mean that the average Montgomery County resident pays $4,859 each year in property taxes, even more than residents of Washington D.C.
Fairfax County's effective property tax rate is 1.12%—slightly higher than the U.S. average. The property tax bills in this area are almost triple the U.S. average due to high property values, with an average annual bill of $6,463.
Since property taxes are levied according to the budget needs of taxing units (like counties and school districts), the amount you’ll pay can change every year. It can also change if your home’s assessed value increases significantly. For many, big jumps in property taxes can cause stress and financial strain—but don’t worry. There are ways to reduce your tax amount and cap the percentage it can increase each year. In D.C., Maryland, and Virginia, you just have to apply for the homestead deduction.
What is the homestead deduction? What about tax caps?
In Washington D.C., the Homestead Deduction reduces your residential property's assessed value by $78,700 before your tax liability is computed. That translates to annual savings of $668.95. Don’t worry; your home’s actual value won’t be reduced. A property’s assessed value is just its value for tax purposes. It’s found by multiplying your home’s market value by a predetermined percentage.
Since market values have surged recently, homeowners in Washington D.C. will also receive the Assessment Cap Credit to offset tax bills. This cap ensures that your property’s assessed value can only go up 10% in a single year. If your property’s assessed value has risen more than that in a year, the difference in the amount you owe will appear as a credit on your tax bill. This will happen automatically—you don’t have to do anything! There are other deductions available for veterans, senior citizens, and disabled citizens. Check out the Office of Tax and Revenue website for more information.
If you live in Maryland, the Homestead Tax Credit works a lot like the Assessment Cap Credit in D.C. If you meet the eligibility requirements, this credit will cap the amount your property tax can increase in a single year. It does this by crediting your tax bill with the tax raised against any portion of your home’s assessed value that increased more than 10% over last year. Confusing? Let’s look at it like this:
If your home’s assessed value increased by 15%, only the first 10% of the increase will be used to determine your tax liability. The tax against the remaining 5% will appear as a tax credit so you won’t pay for it out of pocket.
An important note for Maryland residents: if your local government has a lower tax cap than the state of Maryland, the lower of the two will apply. That means more savings for you!
Virginia's Homestead Exemption is different and doesn't apply to property taxes. This exemption is used to preserve some of your home's equity if you ever have to file bankruptcy. If this is the case and you qualify, you can exempt up to $25,000 of your home's equity during the bankruptcy process. Get the official details here.
Looking for property tax breaks in Virginia? Search locally! Many Virginia counties and cities offer property tax breaks that you don't find at the state level. The Virginia tax code outlines how localities are to manage property tax relief, while your city and county websites will give you details on where and how to apply.
Fairfax County offers property tax relief to senior citizens, people with disabilities, and individuals and households under certain income limits. See the details and find out if you qualify on the county's tax relief website.
Loundon County also offers tax relief to senior citizens, people with disabilities, disabled Veterans, and more. Find out more on the county's tax relief and tax exemptions website.
Who qualifies for homestead deductions?
To receive the Homestead Deduction in Washington D.C., the following requirements must be met:
1. An application must be on file with the Office of Tax and Revenue;
2. The property must be occupied by the owner/applicant and contain no more than five dwelling units (including the unit occupied by the owner); and
3. The property must be the principal residence (domicile) of the owner/applicant.
To receive the Homestead Tax Credit in Maryland, these are the requirements:
1. The homeowner must apply using the one-time Homestead Tax Credit Eligibility application.
2. The property must be the principal residence of the owner/applicant.
3. Additionally, the following conditions must be true for the previous tax year:
- The property was not transferred to new ownership.
- There was no change in the zoning classification requested by the homeowner resulting in an increased value of the property.
- A substantial change did not occur in the use of the property.
- The previous assessment was not clearly erroneous.
For more details about eligibility requirements relating to the application and other specific situations, see the Homestead Tax Credit website.
To receive property tax relief in Virginia:
Visit your county or city's property tax relief website.
Live in Fairfax County? Check out this page to see if you qualify for a property tax break.
How do I get the homestead deduction?
Washington D.C. homeowner? Apply for the Homestead Deduction using the online ASD-100 application on the MyTax DC website. You’ll have to create an account if you don’t have one already.
Own your home in Maryland? Apply for the Homestead Tax Credit online using the Homestead Tax Credit Eligibility Application. You may also request a paper application be mailed to you by calling 410-767-2165 or 1-866-650-8783.
Are you a Virginia homeowner? You'll need to view application requirements and apply for tax breaks through your county or city's property tax website.
Stay up-to-date on the latest homeownership tips
The Speicher Group of Long & Foster is always looking for ways to share our hard-earned real estate wisdom with our community. Think you could benefit from property tax tips, home improvement ideas, current available listings, or other local insights? Get us in your inbox. We’ll keep you updated and in the loop, and we’ll never spam you. Fill out the form below to get started.
Looking for more market insights? Let's chat—schedule a time for a call and we can answer any of your questions.