A Tax Reckoning is Coming in the DMV
Real estate owners in Maryland, Virginia, and Washington, D.C., may be in for a rude tax awakening in the coming years. There are several compounding factors that may result in significant tax rate increases impacting DMV real estate tax bills. Here are the three main factors raising the risk of future rate increases.
1. The federal government will shed millions of square feet of office space over the next 5 years, further driving up vacancy rates in the office market. This drives down values, which in turn (theoretically, at least) will lead to a decline in assessed values.
2. ARPA money doled out during the pandemic by the federal government as state and local tax relief will be depleted in the next 24 months. Many taxing jurisdictions used that money as a crutch to plug budget gaps.
3. Washington, D.C. is experiencing an exodus of professionals, resulting in pressure on real estate values across the board.
All of these factors lead to a deterioration in the assessment base for local jurisdictions in the DMV. With lower values, many jurisdictions’ only choice to make budgets whole will be to raise rates. And from a taxpayer perspective, that’s scary. Here’s why. An owner can take issue with, and appeal, assessed values they disagree with. However, when tax rates increase there is no relief other than at the ballot box.
Unfortunately, measures to reduce real estate taxes by elected officials aren’t often advanced. In fact, it’s rare in the Washington, D.C., area to see a net reduction in your real estate tax bill. And with the factors outlined above on the horizon, that likelihood is even lower.BACK TO ARTICLES