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The Washington D.C. Council voted in January to give commercial
property owners a break on their real and personal property
taxes. However, how much of a break remains to be determined.
Businesses will only benefit if certain conditions are met.
Lower Tax Rate
Bill 17-20, The Small Business Property Tax Relief Act of 2008,
grants a lower tax rate for Class 2 properties if
greater-than-expected property tax revenues are collected on
commercial real property.
Every dollar in excess commercial tax revenue
will be used to reduce the Class 2 commercial property tax rate.
How Does It
Work?
Starting this year, the Chief Financial Officer
will create an annual budget projection prior to the annual
reassessment. When actual revenues exceed this projection, the
tax rate is lowered and Class 2 taxpayers receive a tax
reduction.
Lower rates apply only to the first $3 million
of assessed value; the regular $1.85 per $100 valuation rate
remains on values above $3 million.
What About
Next Year?
Provisions are included for future tax cuts. The
Tax Year 2009 projection will be the base. Subsequent years will
use the prior year’s projection plus 10%. If revenue growth is
less than 10%, there will be no new tax reduction.
Personal
Property Exemption
A second portion of Bill 17-20 raises the
personal property tax exemption for companies’ machinery,
equipment, furniture and other non-real estate assets from
$50,000 to $225,000.
Congress Must
Approve
Before the rate-cutting legislation becomes law,
it must be approved by Congress. The projected date for
Congressional approval is April 9, 2008.
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