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D.C. Budget Raises Commercial Property Taxes

by Tom Branham, Washington D.C., May 2018

 

The D.C. Council is one step closer to passing its 2019 budget. The proposed budget includes a tax rate increase for commercial properties assessed at more than $5 million to help fund mass transit. Another aspect of the budget that should concern taxpayers involves a change to the commercial property tax system, which will affect property owners differently based on the total assessed value of their property.

 

Large commercial property owners may be impacted the most and face paying higher property taxes starting October 1.

 

What is Changing?

 

The property tax rate on commercial properties assessed at more than
$5 million will jump to $1.89 for every $100 of assessed value from the current $1.85 for every $100 of assessed value.

 

Also changing is the previous two-tier system that charged $1.65 per $100 valuation for the first $3 million and $1.85 per $100 valuation for any remaining amount over $3 million. It is being replaced with a new system that effectively creates two classes of commercial property...

 

  • Properties < $5 million in assessed value (taxed at $1.65 per
    $100 of assessed value)
  • Properties > $5 million in assessed value (taxed at $1.89 per
    $100 of assessed value)

 

Properties valued at less than $3 million will see no change in taxes, properties valued between $3 million and $5 million will see a decrease,
but properties greater than $5 million will see significant property tax increases because the entire value amount will be taxed at the new (and higher) tax rate.

 

Considering the average increase in the tax rate and property assessments, commercial tax bills could well be significantly higher for 2019.

 

An Omen of Things to Come?

 

While property assessments have steadily increased, actual tax rates have remained relatively flat for the last 25 years...until now. There are concerns that a change in the tax rate sets a precedent and opens the door for more tax rate hikes in the future.

 

POER stands ready to help manage and minimize your property taxes. Please contact us for any questions you may have regarding your tax obligation.

 

Tom Branham

VP & Managing Consultant - DC

(571) 366-4632

TomBranham@mfpoer.com

Marc Bragin

Senior Account Relationship Executive
(571) 366-4636

MarcBragin@mfpoer.com