Washington, DC is considering two proposals that could change how certain second homes are taxed in the District.

A pied-à-terre is generally a residence maintained in the city that is not the owner’s primary home. In DC, that could include someone who keeps a residence here for work or divides their time between Washington and another city.

Two Proposals Are on the Table

Ward 3 Councilmember Matt Frumin has introduced legislation that would create a new property tax classification for certain higher value homes that are not owner occupied.

Under his proposal, qualifying residential properties assessed at $2.558 million or more that do not receive DC’s Homestead Deduction would be taxed at $2.50 per $100 of assessed value.

The proposal includes several exemptions, including certain properties with long term tenants, homes undergoing active construction, and properties actively marketed for sale or rent.

Council Chairman Phil Mendelson has also raised a separate proposal for taxing second homes, although his concept is less developed at this stage.

Why It Matters for DC Real Estate

For most DC homeowners, nothing changes today. Both proposals are still under consideration.

The issue is particularly relevant to the higher end of the market, where some buyers maintain a DC residence while keeping their primary home elsewhere. If a pied-à-terre tax becomes law, the additional carrying cost could become another consideration when purchasing and owning a second home in the District.

It is also important to distinguish a second home from an investment property. A property without a Homestead Deduction is not automatically a pied-à-terre, making the final definitions and exemptions particularly important.

For now, DC property owners and prospective buyers should simply keep the proposals on their radar. I will continue following the legislation as it moves through the Council and share updates as the details become clearer.

If you own a second home in DC or are considering purchasing one, understanding how these proposals could affect your ownership costs is important. Contact me to discuss what the proposed changes may mean for your property or your plans in the District.