Ask an Agent: Will the New Tax on Co-ops Make Them Less Appealing to Buyers in DC?
Starting October 1st, co-op sales in DC will be taxed under an economic interest tax, which will be set at 1.1 percent for residential property sales less than $400,000 and at 1.45 percent for sales $400,000 and above. Currently, co-op owners are exempt from these type of recordation and transfer taxes. In this week's installment of Ask An Agent, a reader wonders if this new tax will make co-ops a more unappealing property buy than condos. Keller Williams' Jason Martin offers up some insight.
Question: I have been looking at condos and co-ops in the DC area for the last two months, and just realized that the recordation/transfer taxes for co-ops will go into effect in about two weeks. The lack of this type of tax was one of the benefits to buying a co-op in the District, so now I am wondering what the real benefits are to buying a co-op or if this new tax has leveled the playing field so to speak for condos and co-ops. Any input is appreciated.
Answer: Not having a recordation or transfer tax has certainly been a benefit to both buyers and sellers of co-ops in the past. However, I have found that purchasers who make the decision to invest in a co-op aren’t doing so strictly based on this added incentive, I believe it has been a very nice bonus but not the deciding factor. Often times purchasers invest in co-ops because they like the building, location or amenities. The overall impact of this decision is TBD, but my guess is that the effects will be minimal over the long term.
If you would like to submit a question for Ask An Agent, send an email to editor@urbanturf.com.
See other articles related to: ask an agent, dc condos, dclofts
This article originally published at https://dc.urbanturf.com/articles/blog/ask_an_agent_will_the_new_tax_on_co-ops_make_them_less_appealing_to_buyers_/1316.
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