Council Member Bowser “introduces legislation to remove assessment cap on home renovations”


From a press release:

“In today’s legislative session, Councilmember Bowser introduced the “Home Improvement and Age-in-Place Incentive Act of 2009,” which will remove the assessment cap credit on home renovations. This bill provides an economic incentive for homeowners, most especially seniors, to renovate their homes.

District law currently limits the increase on a homeowner’s property tax bill to 10 percent above the previous year’s assessment. This cap, however, does not apply if a homeowner undertakes renovations that result in at least a 10 percent increase in property value. In this scenario, the entire value of the renovations as well as the market price are captured and taxed accordingly. Councilmember Bowser said “Not only does this law adversely affect lower-income homeowners but also seniors who must renovate their homes to make them, at the very least, habitable so that they may age-in-place.”

If passed, homeowners, including seniors, may renovate their homes, install a first-floor bathroom, fix a roof, install a wheelchair lift, or replace windows. Further, this bill will permit owners of lower-valued homes to benefit from the tax break to the same extent as owners of high-valued homes.”

Now, I can renovate my kitchen! Do you guys think this legislation is a good idea?

23 Comment

  • Sounds great for homeowners. Who could be against it, right ?

    After all real property taxes in this municipality take a lot out of any property owner.

    I’ve been paying them for 35 years here. Let’s scratch the surface, might we ?

    One of my rowhouses is situated in a group of five rowhouses. Rented out, I can’t claim a homestead exemption nor is their any cap on assessments. So, over the years the assessed value has risen and risen and risen; total last tax bill: $7,100.

    This row house is two story and basement, 3 bdrms, 3 baths well kept with (much personal sacrifice) but with modest improvements: formica countertops, Sears Kenmore applicances, Kenmore washer/dryer in basement.

    Another row house in the same group is owner occupied with a pop up level above and a full finished basement: 4 bdrms, 4 1/2 baths with high end finishes, granite countertops, Sub Zero, Wolf range, etc. (you get the picture). Total last tax bill: $1,200.

    Why should I pay six times more than the homeowner two doors down ? What incentive do I have to continue being a provider of affordable housing ?

    These are the consequences of government intervention, social engineering, and manipulation of citizens; good intentions that shift the real tax burden upon others who supposedly have too much. Really ?

    -Another good reason why nobody wants to be a landlord in this city and why it’s so hard to find affordable housing.

  • Agree with the first commenter.

  • +2 on the first one – and I would add, my neighbor inherited his house, never transferred the title from the estate, receives the homestead and senior exemption (he’s 40). I pay $3800, he pays $1300 and he complains about the property taxes. Point is, big brother creates these complex tax schemes but can’t police it. Meanwhile, they hire assessors, enforcers, admin people, etc… wasting more tax dollars. Yes, it is my duty to notify the city, but I’m not complaining about him, more the city. Hell, they have a death certificate in one fileroom, one would think part of the exit proceedings would be: Did they own any real property? Who was it transferred to?

  • Property taxes here are still are still much less than the region, let alone nationally. Rather then keep changing the code, OTR needs to be diligent in properly assessing property.

  • BAD IDEA! Its not as bad as prop 13 in california (from years back) but its another thing that will cause problems with city income. Lets be blunt, the people doing the renovations are not seniors, they are investors and the higher income peoples moving into the neighborhood.

    Also, DCs taxes are low. My tax on my DC house is less than half my house in PG county and its worth twice as much.

  • What Eric said. He’s exactly right.

  • Eric,

    What’ wrong with investors and higher income people moving into the neighborhood? That’s a good thing, it increases tax revenue, and improves the neighborhood.

  • Haven’t read the bill, but I would assume you would have to already be qualifying for the homestead and/or senior exemption to get the cap.

    Investors annual assessments aren’t capped, and as for high income people – we should screw them as hard as we can, so they all leave, that way the city will have less income tax revenue and will have to raise property taxes on everyone.

    They should do everything they can to attract all investment, cutting the income tax rate for people earning under $100k (instead of $40k), would do wonders to lure people in.

  • How will this be paid for? Will taxes be raised elsewhere? Will city services be cut?

  • This proposal raises some very important issues about fairness. I am not against the proposal, but I believe it could be strengthened by a sliding scale. For example, renovating a kitchen or basement in a home assessed at a value of under $500,000 shoudl be treated differently than a much more expensive renovation in a home with a higher value. We would have to spend some time coming up with the right approach that didn’t cuase unintended consequences. In tthe meantime, there is clarely a need for better enforcement. In our neighborhoood, far too many homes are rented to problem tenants creating serious quality of life issues for neighbors. yet often the homes continue to have homestead and senior exemptions when the owners have long since moved. In a recent bust, MPD arested 10 people in such a home on cocaine charges. The home has an assessed value of $400,000, yet the absent owner pays $600 in property taxes, while the rest of us pay for the needed enforcement and intervention.

  • L – the homeowner will pay for the improvement, the city will reassess, the homeowner will have his assessment increase, the city will collect more tax.

    It don’t cost nothing, just creates incentives… the way good policy should.

    David – great point, if my neighbor caused me hardship, I would indeed report it. As I have fixed up my home, he has fixed up his… if I were to report him, he may not be able to afford the improvements. Also, I think you can verify whether that house has a rental license (another stupid thing that punishes people for complying and probably costs more to administer than revenue brought in) report that, maybe they’ll connect the dots on the homestead exemption… somehow I doubt it though.

  • @ Dirty: I meant, how will the shortfall in tax revenue be made up, not how will the home improvements be paid for.

  • Where do you see a shortfall in revenue, if the revenue never existed? There is no shortfall in revenue, the improvement causes the assessment to increase, thus the taxes increase. Big picture – lot’s of improvements will increase assessment’s for all. Homeowner’s and senior will be protected. Landlords will be burdened with the increase and increase rents accordingly.

    No improvement, no reassessment, no new taxes.

  • @ Dirty: I guess you’re assuming that this policy will cause people to do home improvements who wouldn’t have done them otherwise. While there probably will be some people falling into this category, I think there will be more who would have done the improvements anyway, but will still pay lower taxes. So I believe the change in policy will on net result in lower tax revenue for DC gov’t.

  • If you tax $100k @ 1% you get $1k. If $300k of improvements would have happened anyway, you get $3k in additional taxes. If (with this policy), you instead get $400k of improvements taxed @.0095% you get $3800 in taxes. If you use a multiplier effect of this situation in a particular zip code, the overall improvements will increase the value of all the homes, thus ultimately generating more revenue.

  • “Haven’t read the bill”

    “as for high income people – we should screw as hard as we can, so that they all leave”

    “Landlords will be burdened with the increase”


    You could care less about the individual. You only see the collective.

    You want to impose your own elitist sense of equality and justice on others in your serfdom. To hell with the individual tax payer. You only see collective zip codes.

    You should work at this White House -if you don’t already.

  • Yo 2:06 – “Haven’t read the bill” – means I’m assuming investors will not qualify for the cap. Screwing high income people was said in complete sarcasm, hence, so they all leave, thus and ultimately screwing everyone else. As for landlords, as their property values increase, they can pass the burden onto their tenants. That’s reality, I’m not advocating for it.

    The very nature of taxation is anti-individual, where do I advocate for more taxes. If the government would do it’s job, efficiently, we would need less tax. This is incentive based policy, not a handout. Yeah, I do see property appreciation as a collective zip code, that’s how property appraisals are done! If everyone in 20010, improves their abode by $50k, the abode is worth $50k more.

    Is this elitist – “They should do everything they can to attract all investment, cutting the income tax rate for people earning under $100k (instead of $40k), would do wonders to lure people in.” Really, giving middle class families more of there own money?

    How anything I’ve said would get me in this White House is mind boggling? Reduce tax rates, create incentives, inefficient DC bureaucracy? Am I missing something?

  • I didn’t know you are supposed to get the city’s go ahead before you renovate your kitchen/bathroom? Why does the city have to know what you do in your own home as long as you are not endangering anyone? Who in their right mind would alert the city if the outcome is a higher tax bill?

  • Nate – depends what you’re doing… if you’re moving/adding plumbing, adding electric, any mechanical (HVAC) or structural… you are required to pull permits. Unless you’re licensed, you can’t get the first three mentioned, as a homeowner – you can pull a basic building permit. All the work also requires inspection upon completion. It’s a perfect example of “how free our society really is?”.

  • I’ll be honest, I don’t get permits. I’ve never had the need to do anything major. But I am adding a new bath in my home now. I didn’t get any permits. I’ve put in central cooling. Never got a permit. If I am comfortable with the people that do the work, I fail to see why the city needs to be involved.

  • For your AC – the contractor is responsible, I don’t think mine pulled a permit, they are a reputable company and I’m sure it’s not worth their time or $50 to pull one. You’re not alone…

  • nate:

    Changing kitchen cabinets is no big deal; hanging new doors as well.

    But a whole new bathroom is something else entirely.

    You may well regret it, and run into some serious problems when it comes to selling your home.

    It’s worth pulling the permit and obtaining finals now, and just put it behind you, or face potential problems later and open end liability in the future for conveying un-permitted improvements to real property. -a drag I know, but that’s modern life in 2009.

    Play it safe and comply. Live and work within the law.

  • Damn I never thought about that. My contractor never mentioned it either. I’ll definitely look into it.

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