Quarterly: Summer 2004 - GWCAR - Greater Washington Commercial Association of REALTORS

CBQ >> Summer 2004 Issue

DC Council Keeps Promise to Lower Recordation Tax

In its last legislative meeting in late June, the District of Columbia Council voted to keep their promise to roll back real estate transfer and recordation taxes. On the second reading of the District's Budget Support Act, the DC Council approved a reduction from 1.5 to 1.1 percent for each of the city's deed recordation and property transfer taxes.

In September 2002, the DC government discovered a considerable gap between projected revenues and budgeted government operations. In response, the Mayor and DC Council agreed to increase certain fees, fines and taxes, including a temporary hike in the rate for recordation and transfer taxes.

GWCAR negotiated an exemption for lower priced real estate and a "sunset" of the tax hike in the event that revenues exceeded an amount certain in any given year.

Since then, the District's real estate market has continued to surge, but the District government threatened to narrowly interpret the sunset clause and spend the revenues instead.

When the DC Office of the Chief Financial Officer recently determined that revenues far in excess of his projections had been collected from real estate transactions since the start of the current fiscal year, GWCAR staff aggressively pursued a tax rollback.

Support for our position came from the Board of Trade and from the DC Chamber of Commerce, which wrote: "We commend [you] for making the tough choices to balance the... 2005 budget [and] we ask that you go one step further and keep your commitment to roll back the real estate transfer and recordation taxes."

GWCAR members told the council that taxes generally based on the number and size of real estate transactions tend to be more volatile and unreliable than other tax schemes.

In response to GWCAR lobbying, support from the business community and hundreds of grassroots letters from real estate professionals, the council voted to keep their promise that the tax hikes would be temporary.

The repeal goes into effect on October 1, 2004--the first day of fiscal year 2005.