Selling a property that the owner has already vacated? If the property is located in the District of Columbia, you will want to register the property as vacant with the city so that it can be exempt from paying additional property taxes.
The Real Property Classification Clarification Emergency Act of 2002 created a Class 3 property tax rate for vacant commercial and residential properties in the District of Columbia. Vacant property is taxed at $10.00 per $100 of assessed value – by comparison, a Class 1 residential property is taxed at $0.85 per $100 of assessed value!
Sellers who move out of a property before it is sold run the risk of having their property reclassified as vacant. The Department of Consumer and Regulatory Affairs (DCRA) inspects properties regularly to determine whether or not they are vacant. Individuals are also encouraged to report vacant properties to the DCRA. So a property that takes some time to sell and has already been vacated by the owners is particularly vulnerable to being reclassified.
Fortunately, by registering the property with the DCRA, an exemption does apply. A form needs to be completed with exemption category 5 checked and a small fee submitted. Also, supporting attachments must be submitted, such as the listing agreement with the realty agent contact information and documents showing ownership (either the Deed or HUD-1 Settlement Statement will typically suffice). The code allows for an exemption from Class 3 status for up to one year.
Here is the link to the form.
Usually doing something first class costs you money, but in the District of Columbia, you want your property to receive the Class 1 treatment. So when vacating a listing, remember to register to get your Class 1 status – it will save a ton of money!