AOBA-DC OFFICE OF THE CHIEF FINANCIAL OFFICER MEETING JULY 24, 2019 at 10:00 A.M AOBA CONFERENCE ROOM
SPECIAL GUESTS: Robert McKeon, Deputy Chief Counsel, DC Office of Tax and Revenue Ida Williams, Recorder of Deeds
Members interested in attending should RSVP to email@example.com.
Do you have questions about how recently adopted increases to the District’s deed transfer and recordation tax rates will impact your multifamily portfolio? On July 24 at 10:00 a.m., AOBA will host representatives from the District’s Office of the Chief Financial Officer (OCFO) to answer your questions about the real property tax increases that will be effective on October 1.
BACKGROUND On May 28, the DC Council unanimously adopted increases to the commercial real property and deed transfer and recordation tax rates. The increases will take effect on October 1. The Recorder of Deeds will update its FP-7 tax return by the beginning of August and will be able to provide an informational guide.
Deed transfer and recordation tax rates: The FY20 budget increased the deed transfer and recordation tax rates from 1.45 percent to 2.5 percent 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 dry-cleaning business, then part of the building is Class 2 and thus the entire building’s transfer will be applied at the new rate increase.
Commercial tax increase retained: 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.