Council Approves Tax Increases; New Rates Take Effect Oct. 1

Posted By: Kirsten B. Williams, Esq. Headlines ,

On May 28, the DC Council unanimously passed the District’s third tax increase in just the past two years, this time impacting both the commercial property tax rate and the deed and recordation tax rates. As a reminder, the Fiscal Year 2020 Budget will increase the transfer and recordation tax rates from 1.45% to 2.5% on all non-residential commercial property sales over $2 million. Sales would be subject to a combined 5 percent tax, up from the current 2.9 percent. Transfers of economic interest in commercial and mixed-use property greater than $2 million would also be subject to a 5 percent tax up from 2.9 percent. It is important to note that if any part of the property is Class 2 (commercial), then the new deed and recordation tax increase applies to the entire building, even if the majority of the building is Class 1 residential/multifamily.  For example, if an apartment building includes a drycleaning business, then part of the building is Class 2 and thus the entire building’s transfer will be applied at the new rate increase. It also reverses the Council’s decision to utilize revenue collected from the Internet Sales Tax Act, which would have allowed the District to use the estimated $24 million in internet sales to reduce the tax rate on commercial properties valued over $10 million, restoring the rate from $1.89 to $1.85 per $100 of assessed value.


If you have questions about the FY20 budget or the new rates, please contact Kirsten Williams at (202) 296-3390, ext. 243 or via email