In a city that’s constantly changing, staying up-to-date on the latest trends in real estate can be intimidating, to say the least. But not to fear: The Jenn Smira team has got you covered! The most recent development on the DC housing scene? Just this month, on October 1, the city introduced a new “mansion tax” that aims to target certain high-value homes. Wondering how this change might impact you?

Here’s a quick guide to everything you need to know about the arrival of DC’s mansion tax today:

#1 New Tax for Homes Above $2.5M

• This tax applies only to residential properties assessed at over $2.5 million, adding an extra $1.00 per $100 of assessed value above this amount.
• The regular tax rate ($0.85 per $100) applies to the first $2.5 million of a home’s value, so only the amount above that is taxed at the higher rate.
• The tax was conceived to address budget shortfalls in DC, prioritizing housing and infrastructure investments above all.

#2 Projected Tax Revenue

• This new tax is projected to bring in around $5.7 million during fiscal year 2025, with $23.7 million in growth anticipated over the next four years.
• The revenue yielded will help cover budget gaps due to reduced federal aid and slower revenue growth.

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#3 Neighborhoods Most Affected

• The tax primarily affects affluent neighborhoods like Georgetown, Kalorama, and Massachusetts Avenue Heights. Together, these areas account for about 50% of DC’s homes valued over $2.5 million, which represent only around 2% of all DC properties.
• Georgetown has the most properties assessed above $2.5 million (515 properties or 20% of its total). Meanwhile, over half (50.7%) of properties in Massachusetts Avenue Heights exceed the $2.5 million threshold.
• Out of DC’s 74 neighborhoods, only 31 have properties that meet these criteria, meaning only a small group of homeowners will be targeted.

#4 How DC’s Tax Compares to Other Areas

• While other cities have considered implementing similar taxes on high-value properties, DC’s version focuses only on homes valued above $2.5 million, instead of using a broader progressive property tax.

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#5 Reactions to the New Tax

• Supporters see it as a fair, progressive tax on wealthier homeowners, sparing middle-and-lower-income families.
• Critics, however, argue that it could discourage ongoing investment in DC’s luxury market, potentially driving high-end homeowners away, which might negatively affect local businesses and property values in turn.

Curious to learn more about what the mansion tax might mean for you? Whether you’re looking to buy, sell, or just stay informed, let’s connect and create a plan that fits your unique lifestyle and goals!

Want to make moves in DC? Get in touch with our team today by calling 202.280.2060 or book a consultation with us here.