Councilmember David Grosso intends to propose a “mansion tax,” Nena Perry-Brown reports:
The increased property tax would affect owner-occupied houses valued at over $1 million.
WAMU’s Tom Sherwood tweeted that the tax premium would be applied to the assessed value above $1 million rather than for the full value of the property, and that there would be a different, higher tax premium tier for homes valued at over $2 million. Although no fiscal impact statement has been completed, Grosso estimated that the provision could raise over $50 million in annual revenue.
What would that look like in a region where a U Street condo, a Capitol Hill townhouse that needs updating, and a small vacant lot with a picnic table on it all list for more than a million bucks? First, none of these properties are assessed by the city for over a million, even if you include the value of the land. The price you’d likely pay for them is more a function of DC’s hot real estate market. Still, it’s not hard to imagine those assessed values going up over time.
Grosso’s bill is still under construction, Perry-Brown reports, so details beyond Tom Sherwood‘s tweets are scarce. Grosso has not yet replied to a couple questions from Washingtonian: Whether the tax would take into account land value, and whether it would be an annual tax or a “transfer tax,” like the one that will go into effect in New York later this year. That one will use the sale price for a one-time tax paid when buyers close. There’s already a 1 percent tax on purchases over $1 million, and the new tax will increase the rate for anything over $2 million, up to 4.15 percent if you’re spending more than $25 million.