Benjamin Franklin is quoted as saying “In life two things are certain: death and taxes.”
Franklin was right. As a landlord in D.C. (or anywhere else), you certainly do need to worry about a variety of taxes.
Real property tax (aka real estate taxes)
You already know that you have to pay property taxes. But maybe you didn’t know this: If your rental property was your primary residence but it no longer is, and you have a Homestead Exemption on that property, then you must cancel the exemption. The cancellation does not happen automatically when you apply for a rental license. Failure to remove the exemption can result in you getting stiff penalties plus having to pay back the credit you received. And remember – when you remove the exemption, the taxable assessment (value) of your property will go up by $75,700, which equates to an increase in your property tax bill of $641.50 annually.
Franchise Tax (Business Income Tax)
Due Date: April 15
Required Filing: D-30 Unincorporated Franchise Tax Return or D-20 Corporate Franchise Tax Return
Renting out property in Washington, D.C. is considered a business activity. As a result, you must have a valid business license, and the rental income you receive is treated as business income.
Even if you are not a D.C. resident, file taxes in another state, or are a foreign national who does not typically file U.S. taxes, you are still required to pay D.C.’s franchise tax and comply with its reporting requirements.
Which Return Do You File?
For Sole Proprietors, Trusts, and Non-Corporate Entities
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You are subject to the Unincorporated Business Franchise Tax.
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You must file Form D-30 with the Office of Tax and Revenue (OTR).
For Corporations
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You are subject to the Corporate Franchise Tax.
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You must file Form D-20 with OTR.
Tax Rates and Minimums
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Tax Rate (2019): 8.25%
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Minimum Tax: $250 (if combined gross income is $1 million or less)
Note: As of November 2021, OTR has not released updated tax rates or minimum thresholds. The figures above are based on the most recent published information.
Additional Resources
Personal Property Tax
Due Date: July 31
Required Filing: FP-31 Personal Property Tax Return
In many cases, as part of your initial tax registration, the DC Office of Tax and Revenue (OTR) will automatically register you—or your business entity—for a personal property tax return. This tax is assessed once per year and requires filing an FP-31 form.
Who Must File
According to the DC Office of Tax and Revenue, the following must file a personal property tax return if they own or hold personal property in DC:
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Individuals
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Corporations
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Partnerships
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Executors & Administrators
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Guardians, Receivers, and Trustees
Under DC Code § 47–1522, the District levies a tax on tangible property owned or held in trust for business use in DC. The current tax rate is $3.40 per $100 of the taxable personal property value, in excess of $225,000.
Exemption Threshold
If your total personal property is less than $225,000, you will likely owe no tax.
However, even if no tax is due, you are still required to file the FP-31 return annually by July 31.
Unique Filing Timeline
Unlike many taxes that are paid in arrears (after the tax year has ended), this return is filed in advance:
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The FP-31 return is due July 31 each year.
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The filing covers the upcoming tax year.
Example:
The filing due on July 31, 2025, you are actually submitting the 2026 Personal Property Tax Return.
D.C. sales tax on hotels
(aka occupancy tax on transient accommodations such as Airbnb, VRBO, Homeaway or the like)
If you are renting short-term (for tax purposes, short-term is considered reservations that are for less than 90 days), as landlord, you are required to collect an occupancy tax as part of every reservation and remit the tax to the OTR. As of November 2021, the tax rate is 14.95% and is based on the total amount of the reservation, which includes listing price, cleaning fee(s), and guest fee(s).
Seek Advice
Before you rent a property, you should always seek the expertise of an attorney and an accountant who can advise you on legal and tax liabilities. The taxes we have presented here are ones we are aware of; they are presented for informational purposes only. RentJiffy is not a law firm or tax firm and does not provide legal or tax advice.