Property owners in Washington, D.C. may have been surprised to receive a corrected real estate tax bill at the end of September, which applied a retroactive “vacant” classification to the property. The vacant “Class 3” classification carries an effective tax rate of 5.00%, a stark increase from the standard 0.85% residential “Class 1” rate and 1.65%-1.77%-1.89% standard “Class 2” commercial rates. In many cases, the District has backdated this classification change to include prior tax years, thereby showing a large balance of unpaid tax, penalty, and interest on the corrected bill.
The experts at Ryan recommend that owners who are impacted by this increase should explore if their property meets at least one of the exemption criteria:
- The building is under active construction or undergoing active rehabilitation, renovation, or repair.
- You have been actively seeking to rent or sell the building for less than one year for residential properties or less than two years for commercial properties.
- The building is subject of a probate proceeding or the title is the subject of litigation.
- A property is the subject of a pending application for development that requires approval of the Board of Zoning Adjustment, Zoning Commission, Commission of Fine Arts, Historic Preservation Review Board, Mayor’s Agent for Historic Preservation, or National Capital Planning Commission.
- The owner of the property is requesting economic hardship because of extraordinary circumstances.
Owners can then complete the required Vacant Building Response Form, provide the necessary support, and email the finished document to the Department of Buildings at vacantbuildings@dc.gov.
In the event that an exemption request is denied or if you have any questions, please reach out to one of the Washington, D.C.-based Ryan experts for assistance.
TECHNICAL INFORMATION CONTACTS:
Michael Allen
Principal
Ryan
703.473.6603
michael.allen@ryan.com
Cutchin Powell
Principal
Ryan
703.746.0022
cutchin.powell@ryan.com
Grant Steinhauser
Principal
Ryan
703.746.0022
grant.steinhauser@ryan.com
Libba McCraw
Senior Consultant
Ryan
703.746.0022
libba.mccraw@ryan.com
The material presented in this communication is intended to provide general information only and should solely be seen as broad guidance and not directed to the particular facts or circumstances of any individual who may read this publication. No liability is accepted for acts or omissions taken in reliance upon the content of this piece. Before taking (or not taking) any action, readers should seek professional advice specific to their situation from Ryan, LLC or other tax professionals. For additional information about this topic, please contact us at info@ryan.com.