Proposed Tax for Co-op Sales in DC

• June 1st 2009

by Mark Wellborn

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If you are thinking about selling your co-op, keep in mind that you may have to pay a new tax on it. As part of the Fiscal Year 2010 Budget Support Act of 2009, the DC City Council has included a measure that would tax co-op sales in the District, DCmud reports.

Specifically, the measure calls for a transaction fee for both parties (buyer and seller) in the sale of a co-op unit. For sales under $400,000, that fee would be 1.1 percent and 1.45 percent for any property above $400,000.

Co-ops have long looked attractive to prospective buyers in DC specifically because these types of taxes were not imposed. (This is because the sale of a co-op unit is not a transfer in title like most properties, but rather a transfer of an “economic interest.”) However, this change may affect a buyer’s perception of just how good a deal they are getting.

From DCmud:

“The absence of recordation taxes is one of the few incentives to buying into a cooperative, most of which have more onerous rules than condominiums, carry underlying obligations to the purchaser, and bestow on the Board of Directors the power to reject applicants, all of which tends to suppress the price of co-ops below that of an equivalent condominium. The tax would take effect next year. In other words, sell now.”

This article originally published at http://dc.urbanturf.production.logicbrush.com/articles/blog/proposed_tax_for_co-op_sales_in_dc/971.