A two-family rental property is any property that has 2 units. This could be a rowhouse with an English basement rental, a home with a converted basement rental, or even a house with a carriage house (on the property), which has been converted into a residential rental space.
Like the license title says, these are properties that have 2 completely separated, self-contained units. With a two-family rental license, the owner can live in one unit and rent out the other, or rent both units out.
Required filings and inspections
In the following sections, we’ll explain the licensing process for a Two Family Rental License. It includes the requirements, timeline, general information, and other details.
In D.C., renting property and collecting income, no matter how little or how much, is considered a business activity. Accordingly, you have to obtain a Business Tax Registration, much like you had to obtain a business license. The Business Tax Registration will require you, whether you are a D.C. resident or not, to file a tax return with the DC Office of Tax and Revenue, on an annual basis, to report your rental income. Once your tax return is processed, you’ll have to pay the associated tax, known as the Unincorporated Business Franchise Tax, if the applicant is not a corporation. Otherwise, corporations have to pay a Corporate Franchise Tax.
As of 2021 the Corporate and Unincorporated Franchise Tax rates are 8.25%. Additionally there is $250 minimum tax if your gross receipts are $1 million or less.
Business tax registration is included as part of RentJiffy’s basic license package.
The Basic Business license for a two-family rental endorsement is what you need to rent your property. Note: The applicant must be the owner listed on the property deed.
The basic business license will only be issued after passing a required property maintenance inspection.
The basic business license is included as part of RentJiffy’s basic license package.
RAD Registration is known as the application process that will either register you for rent control or request exemption from rent control.
The RAD registration is the last step in the process. The Rental Accomodations Office does not allow this filing process to begin until the license is issued and typically issues the RAD Registration a few days after the license is issued.
RAD Registration is included as part of RentJiffy’s basic license package.
A CO is required in order to apply for and obtain a two-family rental license. The CO must state the property’s use as two-family flat or have language that specifies two separate units (units are sometimes called flats). The CO must be in the property owner’s name.
If you are unsure if a CO exists for a property, contact us. For a $25 fee, we will do a thorough archive search. We can’t make any promises, but we have found COs going as far back as 1932.
If we find a CO that might be usable for your two-unit property, then your best option would be to initiate a change of ownership process. RentJiffy can assist you with the change of ownership process for an additional fee.
If the property is owned by a business entity such as an LLC or corporation, the company that owns it must be registered with the D.C. Office of Corporations before a license can be issued.
If your property is owned by a company and that company was registered outside of D.C. (such as Maryland or Virginia), you will need to complete a Foreign Entity Registration.
This is not included as part of RentJiffy’s basic license package but we can take care of all of the requirements for the registration for a fee.
For a two-family rental license, you may be required have up to two different inspections for your property.
If you will be undergoing a change of ownership for a Certificate of Occupancy and the CO is 10 years of age or older, then you will be required to have an inspection to make sure the property meets the zoning requirements. Additionally, if there has been construction on the property, whether under the current or previous ownership, and you had a third-party inspection company close the permits instead of a D.C. building inspector, then you may be subject to a third-party oversight inspection. This is where a D.C. inspector will make sure the work was done in accordance with D.C. requirements. If a third-party oversight inspection is needed as well as a zoning inspection, the D.C. building inspection office will combine the inspections.
Additionally, D.C. requires your property to pass a property maintenance inspection, performed by a Building Inspection from the Department of Consumer and Regulatory Affairs, before your license is issued. The District does not accept home inspection reports from home inspectors (you may have had an inspection from a home inspector when you purchased your property). (This means you could potentially have two different inspections on your property.)
If you’d like to learn about what the commonly failed items are, see our article What Inspectors Look For.
RentJiffy offers a time-saving inspection service where we schedule and meet the inspector on your behalf, so you don’t have to. For an additional fee, you can select this service when you complete your license application with us.
The timeline for the two-family rental can greatly vary depending on if the owner has a certificate of occupancy, whether the CO is in the name of the owner, and if a change of ownership needs to be completed. And don’t forget to factor in the inspection that must be passed before the license is issued.
- If the owner has a CO in their name and only needs a license, it could take 15-30 days.
- If the owner has a CO from a previous owner and the CO is less than 10 years old, it could take 30-45 days to change the CO ownership, have a license inspection and finally, a license issuance.
- If the owner has a CO from a previous owner and the CO is 10 years old or older, it could take 30-75 days to change the CO ownership, have a CO inspection and a license inspection and finally, a license issuance.
NOTE: If owner does not have a CO, contact us for more information