D.C. BAR 2020 CONFERENCE – DISCOVER MORE AT https://www.dcbarconference.org

Washington Lawyer

The D.C. Homestead Deduction: Traps for the Unwary and Suggested Reforms

From Washington Lawyer, March 2014

By Andrew L. Howlett

Illustration of a walking house, created by David Plunkett. Real property taxes are a major source of revenue for municipalities across the United States. In the District of Columbia, real property taxes generated approximately $1.715 billion in 2011, or 32 percent of its total tax revenue.[1] Real property tax is the District’s single largest source of tax revenue.[2]

Its current version of the real property tax, imposed in 1981, seeks an “[e]quitable sharing of the financial burden of the government of the District of Columbia.”[3] Although the tax itself is not levied at a progressive rate, numerous incentives available to lower-income homeowners have the effect of lessening the real property tax burden on poorer District residents. In practice, however, taking advantage of these programs can be administratively difficult, to the point where many qualified homeowners are not able to avail of the benefits the District intended to provide for them.

This article lays out for the unwary the pitfalls and traps inherent to one of the District’s most broad-based tax expenditures, the homestead deduction. At first blush, the mechanics of the real property tax as applied to the typical homeowner[4] in the District appear to be relatively straightforward.[5] The District assesses the value of the home and the land on which it sits based on the property’s estimated market value.[6] The homeowner-taxpayer may appeal the District’s assessment if he or she disagrees with it,[7] otherwise the tax owed to the District will be computed by multiplying every $100 of assessment by a statutory rate that depends on the class of the property.[8] The current rate for residential real property is $0.85 for every $100 of the property’s assessed value.[9] Payments of the tax are due to the District in two equal semiannual installments, with the first installment due on March 31 and the second on September 15.[10]

The real property tax potentially imposes a significant burden on homeowners in the District where real estate is extremely expensive, even in lower-income neighborhoods.[11] For example, the average home cost in Anacostia is approximately $215,200.[12] The median annual household income in the same neighborhood is $29,480.[13] Therefore, without taking into account any relief, the owner of an average-value property in Anacostia would have an annual property tax burden of $0.85 x $215,200/100, or $1,829.20, which is about 6.2 percent of the household’s median annual pre-tax income.

There are, however, a few deductions and other protections of which District homeowners may avail to lower their real property tax liability. For instance, low-income, first-time homebuyers qualify for a five-year property tax exemption;[14] senior citizens and disabled property owners with incomes below $100,000 receive a 50 percent reduction in their property tax bill;[15] and increases in the taxable assessment for many residential real properties are limited to 10 percent each year.[16] Low-income District residents also are eligible to claim a “Schedule H” credit on their income tax returns meant to provide relief from real property taxes.[17] The District also administers the Home Purchase Assistance Program, which provides interest-free loans and closing cost assistance to qualified low-income homebuyers.[18]

The most broad-based benefit is the homestead deduction, which, if applicable, reduces a home’s taxable assessment by $69,350 for 2013, a tax savings of $589.48 per year.[19] Section I of this article discusses the rules and processes for obtaining the homestead deduction in the District. Section II describes the practical problems with the administration of the homestead deduction that result in it being unfairly denied to low-income homeowners. Section III proposes potential solutions to this problem.

I. Mechanics of the Homestead Deduction
Only “homesteads” are eligible for the homestead deduction. A homestead is defined as a piece of residential property owned by an individual who is domiciled in the District that is also that individual’s principal place of residence in the District.[20]

The homestead deduction is not granted automatically; rather, District homeowner-taxpayers must affirmatively apply for it. Section 47-850(b) of the D.C. Code states that to qualify for the homestead deduction, “the individual shall complete and file with the Mayor an application in a form prescribed by the Mayor,” and “certify, under penalty of perjury, the information provided on the application form.” Form FP-100 (Homestead Deduction and Senior Citizen/Disabled Property Tax Relief Application) is provided by the District for this purpose and is available online.[21] Form FP-100 requires applicants to submit information about the property itself (address, square and lot number) and also certify (1) that the individual is domiciled in the District, (2) that the property in question is owned by the individual and is the individual’s principal residence, (3) the date the individual moved into the property, and (4) what other property, if any, the resident owns in the District and some basic information about such property.

The form need only be submitted once to secure the benefit of the homestead deduction. It does not need to be resubmitted unless the information on the form changes (i.e., there is a new owner of the property, or the owner no longer occupies the property as his or her primary residence).[22] For individuals who purchase residential property in the District, Form FP-100 is often completed at settlement and filed by them or their real estate agent immediately afterward. For this reason, Form FP-100 is included in a package with Form FP 7/C (Real Property Recordation and Transfer Tax Form).[23] If a properly completed application is filed during the period from October 1 through March 31, the property will receive the homestead deduction for the entire tax year; otherwise, the real property will receive only one-half of the deduction, applicable to the second tax installment only.[24]

The District periodically conducts homestead deduction audits to determine if properties receiving the homestead deduction are, in fact, eligible for it;[25] if they are not, the District will impose back taxes for periods in which the property received the homestead deduction but was not eligible for it.[26] These back taxes will be imposed with interest (at a simple rate of a 1.5 percent for each month of deficiency) and penalties (10 percent of the tax owed).[27] The District’s assessment of back taxes, interest, and penalties for multiple tax years stemming from a single audit can result in a large unpaid balance that may lead to the property being sold at a tax sale, which will cause the owner to incur even more costs and potentially lose the property entirely.[28]

II. Potential Pitfalls in Obtaining the Homestead Deduction
The two primary requirements of legal ownership and affirmative filing of an application create an administrative problem that denies the homestead deduction to many District residents who are the intended beneficiaries, particularly those who lack access to legal and real estate advice. Exacerbating this issue, the District will not permit the homestead deduction to be applied retroactively, which means that a resident can only remedy his or her failure to comply with the homestead deduction’s complex requirements on a going-forward basis. As discussed below, this can lead to dramatic consequences, including the loss of the property altogether.

A. Ownership Requirement
Although not explicit in the statute itself, the ownership requirement for the homestead deduction requires legal ownership. In other words, the homeowner’s name must be on the deed to the property that has been timely and appropriately filed with the District’s Recorder of Deeds.[29]

As noted earlier, the ownership requirement is rarely a problem where the property is transferred through an arm’s-length sale, where both parties are represented by real estate agents and sometimes attorneys as well. In that case, the representatives usually will ensure that the deed is appropriately and timely filed (and should also ensure that the application for the homestead deduction is filed, see section II.B below).  

However, in other transfers problems can arise when the ownership requirement may become murky. The context with the most potential pitfalls in this respect is an inheritance. In contrast to an arm’s-length sale, many small estates in the District are administered by personal representatives[30] who are family members of the decedent and who do not have any legal representation at all. These personal representatives may not know where and how to file a deed transferring the property from the estate to the appropriate devisee (often the personal representative him- or herself, or a family member), and may also be unaware that the devisee is eligible for a homestead deduction if he or she lives in the property, and that a form must be filed to obtain it.

Even if the personal representative knows that paperwork must be filed to effectuate a legal transfer of the property, this can be a slow process, as the personal representative is required to fulfill certain duties before title to the property can be transferred.[31] The devisee may be living in the property (and may have been for some time), and the property may have been receiving the homestead deduction prior to the decedent’s death, but until the individual has legal title to the property, an application for the homestead deduction will not be accepted.[32] The personal representative likely is responsible for the property taxes until the deed is filed (during which time the property will be in the name of the estate), without the benefit of the homestead deduction.[33]

Even for those who are aware that such formalities are required in transferring and titling property in the District but choose to ignore them, the permanent removal of the homestead deduction for all periods of noncompliance, accompanied by interest and penalties, can be a particularly harsh punishment, as discussed in section II.C.

B. Application Requirement
While Form FP-100 typically will be filed appropriately in transactions where both parties are represented by real estate agents and/or attorneys, in other situations it can be easily overlooked. For example, where property is transferred outside of the context of an arm’s-length sale (such as through a will or intestacy), there may not be any lawyers involved. An individual may own and live in a property for years and not know that the homestead deduction exists, or that he or she is required to affirmatively apply for it. The individual may assume, based on his or her tax bills, that the property is receiving the homestead deduction because the previous owner submitted an application for it. When the District conducts a reconfirmation audit, it will impose back taxes along with interest and penalties.[34]

Once again, inheritances are an area of significant concern: An individual may become a homeowner as a result of a bequest in a decedent’s will, but may not know that he or she is required to affirmatively apply for the homestead deduction. Even if the property is timely and properly transferred and a deed is filed, no homestead deduction will be available until the individual files Form FP-100. The individual may not know he or she is required to do so until after a reconfirmation audit, at which point the magnitude of back taxes, interest, and penalties can lead to the property being sold at a tax sale, as discussed below.  

C. Retroactive Taxes, Penalties, and Interest; No Retroactive Deduction
As noted above, following a reconfirmation audit the District will apply back taxes, penalties, and interest. On the other hand, a homeowner cannot have the benefit of the homestead deduction apply retroactively even if he or she met all of the statutory requirements for the relevant period, save filing an application. Thus, a homeowner who should have received the homestead deduction may face thousands of dollars in additional tax liability based on his or her ignorance of the filing requirement.

The table on the right provides an example of this draconian result. Suppose that a District resident lives in a property that she received through an inheritance on March 1, 2010, and that the property is worth $200,000. From 2010 through 2012, the property continues to be titled in the District’s records in the name of the decedent, and continues to receive the homestead deduction. The resident pays the tax bill on the property as it becomes due. In early 2013 the District conducts a reconfirmation audit that determines the property is not entitled to the homestead deduction, either because title was never transferred to the resident (failed the ownership requirement) or Form FP-100 was never filed following the transfer (failed the application requirement). The District sends a tax bill that reflects $2,526 in back taxes, penalties, and interest.

The back taxes, penalties, and interest will continue to be due even if the resident files an effective homestead deduction the next day; the homestead deduction will only be valid going forward.[35] Interest will continue to accrue on any unpaid amounts. The resident can argue that that the penalties and interest should be waived, although granting such relief is completely within the District’s discretion.[36]

Therefore, it is quite conceivable that as a result of a reconfirmation audit a low-income District homeowner may find him- or herself with a large tax bill due. Currently, failure to pay this tax bill may result in the District selling a lien on the property in a tax sale. Under the tax sale rules, the unpaid taxes will be auctioned off.[37] In order to redeem the property, the homeowner will have to pay not only the back taxes, penalties, and interest,[38] but also the tax sale fees and attorney’s fees of the purchaser.[39] If he or she is unable to do so, the purchaser may use the purchased tax lien to foreclose the right of redemption on the property and obtain title to it.[40]

Following a Washington Post investigative series in September on the District’s tax sale process,[41] there have been proposals to reform the tax sale system.[42] Currently, the District is involved in a lawsuit challenging the constitutionality of its tax sale procedures.[43] Further, as a result of the Post’s investigation, Mayor Vincent Gray and Chief Financial Officer Natwar Gandhi ordered the cancellation of the 2013 tax lien sales for all properties receiving the homestead deduction. This action, while a step in the right direction, is little comfort to District residents whose properties were sold at a tax sale as a result of being denied the homestead deduction in the first place.[44]

Even if such proposals for reforming the tax sale system are successful, the administrative problems of the homestead deduction system will continue to burden low-income homeowners, exposing them to higher taxes, penalties, and interest.

III. Suggestions for Reform 
As discussed previously, the two major stumbling blocks in extending the homestead deduction benefit to low-income homeowners in the District are (1) the requirement that an application be affirmatively filed and (2) the requirement that the occupier of the home have clear legal title to the property.

A. Eliminate the Application Requirement
The application requirement should be eliminated altogether. Instead, the homestead deduction should simply be awarded to those homes whose owners are also domiciled there, with the default being that the homestead deduction is available for all residential real property unless a form is filed stating that the property is not occupied by its owner.
The District can periodically confirm compliance with the statutory requirements through the reconfirmation audits it already conducts, providing notice to the homeowner that the homestead deduction may be removed.[45] When residential real property is transferred, Form FP-100 would be modified to require filing only in instances where the property does not qualify for the homestead deduction. Not only would this ensure that virtually all homeowners who are entitled to the homestead deduction receive the benefit, it would also lessen the administrative burden on homeowners and the city by reducing the number of filings.

Further, in cases where the District discovers through a reconfirmation audit that a property has wrongly received the homestead deduction, the District may still be “made whole” by imposing back taxes, penalties, and interest. As under current law, the owner should be required to notify the District if a property no longer qualifies for the homestead deduction.[46]

B. Permit Equitable Owners to Obtain the Homestead Deduction
In situations where an individual (1) occupies a property as his or her primary residence, (2) has assumed the responsibility for paying the real property taxes, and (3) has equitable but not legal title to the property, the homestead deduction should be available where the resident can prove equitable ownership. This would require a statutory change or guidance that interprets D.C. Code Ann. § 47-849(1)(A)(iii)’s ownership requirement to extend to equitable ownership, which could include a resident’s interest in a property under a will in circumstances where title to the property has not been legally transferred from the estate to the resident, or a resident with uncontested ownership who acquired the property through a transaction where the deed of transfer was not properly filed with the Recorder of Deeds.

C. Permit the Homestead Deduction to Apply Retroactively
Just as the District will retroactively assess back taxes, penalties, and interest for tax years in which the homestead deduction was improperly received, if a homeowner applies for a homestead deduction and meets all of the other criteria for previous years, he or she should receive a credit against the taxes paid in those previous years that reflect the homestead deduction. Doing so would ensure that residents are not unfairly punished for being unaware of the application requirement, and also prevent residents from being surprised with large back taxes, penalties, and interest in situations where a reconfirmation audit retroactively removes the homestead deduction benefit solely because an application had not been properly and timely filed.

The homestead deduction has the potential to encourage low-income homeownership in the District and dramatically reduce the real property taxes of many District homeowners. However, the administration of this tax benefit contains many traps for the unwary that are likely to disproportionately impact low-income homeowners who lack access to legal advice on the complicated mechanics of the deduction and other issues related to the District’s tax and property law. Reforming and simplifying the administration of the homestead deduction will make this important tax benefit more accessible to District residents.

Andrew L. Howlett is an associate at Miller & Chevalier Chartered. He graciously acknowledges George Hani, a member at Miller & Chevalier, and Hyungmin Marc Joo, a law clerk at the firm during the summer of 2013, for their assistance on this article.

[1] DC Fiscal Policy Institute, Revenue: Where DC Gets Its Money at 2, (Feb. 7, 2013), www.dcfpi.org/wp-content/uploads/2013/02/2-7-13-Final-Revenue-Primer1.pdf.
[2] Id. at 2.
[3] D.C. Code Ann. § 47-801(1).
[4] The real property tax also applies to business property. See D.C. Code Ann. §§ 47-812, -813. 
[5] The tax is imposed by D.C. Code Ann. § 47-811(a).
[6] D.C. Code Ann. § 47-820.
[7] See D.C. Code Ann. § 47-825.01, et seq. Appeals are made to a “Board of Real Property Assessments and Appeals” appointed by the mayor.
[8] The Council of the District of Columbia is required by October 15 to establish by act the rates for each class of property. D.C. Code Ann. § 47-812. Improved residential property that is occupied by the owner thereof or used exclusively for non-transient residential dwelling purposes is Class 1 property. D.C. Code Ann. § 47-813(b)(1).
[9] D.C. Code Ann. § 47-812(a); Office of the Chief Financial Officer, Notice of Statutory and Special Real Property Tax Rates for Tax Year 2013 (Oct. 19, 2012), www.dcregs.dc.gov/Gateway/NoticeHome.aspx?noticeid=3813960.
[10] D.C. Code Ann. § 47-811(b).
[11] This is notwithstanding that the District’s real property tax rate is lower than that of the surrounding counties of Maryland and Virginia, where the real property tax rate on residential property ranges from $0.958 (Arlington County) to $2.921 (some towns in Prince George’s County) per $100 of assessment. The District has a higher proportion of lower-income residents on whom real property taxes are most burdensome than its surrounding counties. See Alemayehu Bishaw, U.S. Census Bureau, Poverty: 2010 and 2011 at 3 (Sept. 2012) (showing that 18.7 percent of the District’s residents lived below the poverty line in 2011, compared to 10.1 percent of Maryland’s residents and 11.5 percent of Virginia’s residents), www.census.gov/prod/2012pubs/acsbr11-01.pdf.
[12] Anacostia Home Prices and Home Values (Dec. 19, 2013), www.zillow.com/local-info/DC-Washington/Anacostia-home-value/r_121670.
[13] Anacostia (Washington, DC), www.washingtonpost.com/real-estate/neighborhoods/Anacostia,+DC-neighborhood-details.html.
[14] D.C. Code Ann. § 47-3503.
[15] D.C. Code Ann. § 47-863.
[16] D.C. Code Ann. § 47-864; D.C. Rev. Not. No. 2007-01 (Sept. 28, 2007). In order to take advantage of the 10 percent cap, the property must be receiving the homestead deduction, as discussed in detail below.
[17] See D.C. Code Ann. § 47-1806.06. The Schedule H credit is available to homeowners and, to some extent, renters. Id. Schedule H assumes that 15 percent of rent paid is attributable to property taxes. D.C. Code Ann. § 47-1806.06(a)(2). The maximum income eligibility limit for the Schedule H credit is $20,000 and the maximum amount of the benefit is $750. D.C. Code Ann. § 47-1806.06(a)(1), (2). These numbers have not been adjusted for inflation since 1979; if they were, the income eligibility limit would be $53,000 and the maximum benefit would be $2,000. Lindsay Clark, Property Tax Relief for DC’s Low-Income Residents: Improvement Needed in DC’s “Schedule H” Credit (Apr. 8, 2007), www.dcfpi.org/4-8-08tax.pdf. The Schedule H program is subject to complex rules that can limit its benefit to residents most in need of assistance. Id.
[18] To be eligible for the Home Purchase Assistance Program, an applicant must (1) be the head of a household and a first-time homebuyer, (2) be a low-to-moderate income resident based on standards maintained by the District’s Department of Housing and Community Development, (3) own no other residential real estate within the last three years, (4) purchase a home in the District that will be the applicant’s primary residence, and (5) possess a good credit rating. See District of Columbia Department of Housing and Community Development, Home Purchase Assistance Program, http://dhcd.dc.gov/service/home-purchase-assistance-program.
[19] The homestead deduction is set at a base level of $67,500, which is increased annually beginning on October 1, 2012, by a cost-of-living adjustment. D.C. Code Ann. § 47-850(a). The cost-of-living adjustment for any tax year is $67,500 multiplied by the difference between the Consumer Price Index (CPI) for the Washington–Baltimore Metropolitan Statistical Area for the preceding tax year and the CPI for the current tax year, divided by the CPI for the tax year beginning on October 1, 2010. D.C. Code Ann. § 47-802(14).  
[20] D.C. Code Ann. § 47-849(1), (2)(A). A residence will only qualify as a homestead if it is more or less permanently occupied by its owner. Special rules apply to real property owned by a cooperative housing association. See D. C. Code Ann. § 47-849(2)(B).
[21] Form FP-100 is available online at http://otr.cfo.dc.gov/publication/fp-100-homestead-deduction-senior-citizen-and-disabled-property-tax-relief-application. The same form is also used for real property tax benefits available to seniors and persons with disabilities. Prior to May 2, 2011, the application required supporting documents; such documents are no longer required. Office of Tax and Revenue, OTR Streamlines Homestead Deduction and Senior Citizen or Disabled Tax Relief Application (Apr. 18, 2011), http://otr.cfo.dc.gov/release/otr-streamlines-homestead-deduction-and-senior-citizen-or-disabled-tax-relief-application.
[22] See D.C. Code Ann. § 47-850.02(a).  
[23] See District of Columbia Office of Tax and Revenue, Recorder of Deeds, Forms Center, http://otr.cfo.dc.gov/book/recorder-deeds-tax-forms.
[24] D.C. Code Ann. § 47-850(c).
[25] See District of Columbia Office of Tax and Revenue, Homestead Deduction and Senior Citizen Tax Relief Audit (Aug. 28, 2009), http://newsroom.dc.gov/show.aspx/agency/otr/section/2/release/17975/year/2009/month/8.
[26] D.C. Code Ann. § 47-850.02(c)(3). 
[27] D.C. Code Ann. § 47-811(c).
[28] See discussion in section II.C, infra.
[29] See D.C. Code Ann. § 47-802(5)(A) (defining owner as “[a]n owner of record of real property. . .”).
[30] “Personal representative” is the District’s term for “executor.” See D.C. Code Ann. § 20-701 (“A personal representative . . . is a fiduciary who . . . is under a general duty to settle and distribute the estate of the decedent in accordance with the terms of the will or laws relating to intestacy and this title, as expeditiously and efficiently as is prudent and consistent with the best interests of the persons interested in the estate.”).
[31] For example, the personal representative must provide notice of his or her appointment to all interested persons, creditors, and heirs; ensure that all documents relating to any estate property are correctly filed; and prepare a verified inventory of the property owned by the decedent. See D.C. Code Ann. §§ 20-702, -704, -705, -711.
[32] Based on the author’s experience negotiating these issues with the District’s Office of Tax and Revenue, an equitable ownership interest, such as the right to receive the property through a will currently in probate, is not sufficient; the individual must have legal title to satisfy the ownership requirement. In other words, only after the personal representative successfully files a deed transferring the property from the estate to the devisee with the District’s Recorder of Deeds Office can the devisee apply for the homestead deduction. See D.C. Code Ann. § 47-850.02(c)(2) (“[I]f the homestead was transferred and the grantee failed to record timely a deed under § 47-1431 . . . the real property shall be liable for the amount of the delinquent real property tax which was not timely paid, together with interest and penalty as provided in this chapter for the late payment of real property tax”). This process can be circumvented if the previous owner of the property files a Transfer on Death Deed with the Recorder of Deeds designating the transferee as the beneficiary of the deed. This procedure that was made available in 2012 allows the property to pass outside of the estate to the transferee upon the death of the original owner. See D.C. Code Ann § 19-604. See also http://otr.cfo.dc.gov/node/501452 (Transfer on Death Deed form).
[33] D.C. Code Ann. § 20-702 (“The personal representative shall pay taxes on, and take all steps reasonably necessary for the management, protection, and preservation of, the estate in the personal representative’s possession.”). The money for the taxes could come from the estate, if such funds are available. Because the estate and not an individual is the legal owner of the property, the homestead deduction will not be available. See D.C. Code Ann. §§ 47-802(5)(A), 47-849(a)(2)(A)(iii).
[34] D.C. Code Ann. § 47-850.02(c)(3).
[35] Specifically, if a properly completed and approved Form FP-100 is filed from October 1 through March 31 of the tax year, the property shall receive the deduction for the entire tax year; if filed at any other time, the property shall receive only one-half of the deduction, applicable to the second installment only (due on September 15). D.C. Code Ann. § 47-850(c).
[36] D.C. Code Ann. § 47-811.04(1) allows the mayor to waive penalties and interest if doing so would be equitable, just, and in the public interest.
[37] D.C. Code Ann. §§ 47-847(a), 47-1340, et seq. For 2013, only those real properties owing at least $1,000 are eligible for tax sale. D.C. Mun. Regs., tit. 9, § 317.5.
[38] D.C. Mun. Regs., tit. 9, § 316.2(a)(1) (requiring the owner to pay all “taxes, assessments, fees, penalties, interest and other costs levied by a Taxing Agency” in order to redeem the property).
[39] D.C. Code Ann. § 47-1377 (“[U]pon redemption, a purchaser is entitled to be reimbursed by the redeeming person for . . . all expenses as allowed by the Superior Court, including expenses incurred for personal service of process . . . expenses for publication and posting of all required notices, expenses for postage, and reasonable attorney’s fees.”); D.C. Mun. Regs., tit. 9, § 315.3 (requiring payment of $200 tax sale fee).
[40] See D.C. Code Ann. § 47-1370. There is a six-month waiting period following the date of the sale before the purchaser may file a complaint to foreclose the right of redemption. D.C. Code Ann. § 47-1370(a). The service of process of such a complaint is often the first notice that the homeowner receives that his or her home has been sold at a tax sale. See Katherine Driessen, D.C.’s tax sale system lacks notice to homeowners, attorneys say, Wash. Post (May 28, 2012), www.washingtonpost.com/local/dcs-tax-sale-system-lacks-notice-to-homeowners-attorneys-say/2012/05/28/gJQAr4cRxU_story.html.
[41] Michael Sallah, Debbie Cenziper and Steven Rich, Left With Nothing (Part 1), Suspicious Bidding (Part 2), and Mistakes Put Homes in Peril (Part 3), Wash. Post (Sept. 8–10, 2013), www.washingtonpost.com/sf/investigative/collection/homes-for-the-taking.
[42] See District Real Property Tax Sale Act of 2013, Bill 20-476. The District Real Property Tax Sale Act of 2013 would freeze any tax sale of real property of an owner who is a senior citizen, veteran, or disabled individual; establish a $2,000 threshold of taxes owed for any real property to go on a tax sale; require the District to pay the owner any amount it receives in excess of $2,000; and cap the buyer’s attorney’s fees (which must be paid by the owner) at $1,500. A public hearing on the bill was held on October 17, 2013. Mayor Gray submitted his own proposed Real Property Tax Sale Homeowner Protection Act of 2013 to the D.C. Council on September 17, 2013. This proposal is broader than the District Real Property Tax Sale Act of 2013, and would create notice requirements for properties that are in danger of being sold and establish an Office of Real Property Tax Sale Review to receive and review the applications for withholding properties from tax sales or for cancelling sales that have already occurred. In the meantime, the D.C. Council passed a similar emergency reform on September 17, 2013, that is effective for 90 days. Mike Debonis, Emergency tax sale reforms pass D.C. Council, Wash. Post (Sept. 17, 2013), www.washingtonpost.com/blogs/mike-debonis/wp/2013/09/17/emergency-tax-sale-reforms-pass-d-c-council.
[43] See Coleman v. District of Columbia, No.1:12-cv-01456 (D.D.C. Sept. 24, 2013).
[44] Mayor Gray and CFO Gandhi Order Cancellation of 2013 Tax-Lien Sales of District Homeowners’ Properties (Sept. 13, 2013), http://mayor.dc.gov/release/mayor-gray-and-cfo-gandhi-order-cancellation-2013-tax-lien-sales-district-homeowners%E2%80%99.
[45] Indeed, the Homestead Audit Unit already conducts approximately 10,000 audits per year. Harvey Jacobs, D.C. property tax exemptions: Know when you’re eligible, and know when you’re not, Wash. Post (June 24, 2011), www.washingtonpost.com/realestate/dc-property-tax-exemptions-know-when-youre-eligible-and-know-when-youre-not/2011/06/20/AGGV06iH_story.html.
[46] See D.C. Code Ann. § 47-850.02(b)(2).