Effective October 1, 2019, the transfer tax and recordation tax for real estate sales of commercial and mixed-used property on transactions of $2,000,000.00 or above will be significantly increased.
On May 28, 2019, the Council of the District of Columbia unanimously voted to approve Mayor Muriel Bowser’s Fiscal Year 2020 budget. This budget includes an increase of the current 2.9% transfer and recordation taxes to 5% on sales of commercial and mixed-use property valued at $2,000,000.00 or more. The increase will also apply to transfers of a controlling economic interest in entities that own commercial real property.
For sales that are under $2,000,000.00, but are $400,000.00 and above, transfer and recordation taxes will continue to be taxed at a total rate of 2.9%.
Additionally, the recordation tax on deeds of trust in the District of Columbia over $2,000,000.00 will increase from 1.45% to 2.5%.
The bill’s passage is conditioned upon Congress’ passive review and approval by June 28, 2019. However, the tax increase is expected to be enacted.
For more information on the impact of this significant increase, or to discuss any of your concerns, please contact Cozen O’Connor’s real estate group.