The District of Columbia has become the latest jurisdiction to go after wealthy occupants of second homes who spend part of the year in D.C. but pay income tax elsewhere. A bill before the D.C. Council, B26-0802, would impose increased property taxes on residential properties worth roughly $2.6 million or more that are not rented at market rates or used as a primary residence. Here is what the bill does, why D.C. needed a new tax, and how it relates to D.C.'s uniquely worded residency test.
A Familiar Playbook
Targeted properties would be reclassified into a new class and taxed at $2.50 per $100 of assessed value above the $2.6 million threshold, nearly three times the base rate. The bill’s proponent was direct: it targets wealthy occupants who allegedly benefit from D.C. services without paying their fair share.
The approach is familiar. A committee memorandum cites similar measures elsewhere, including New York City's pied-à-terre tax on homes over $5 million currently being challenged in court, a Rhode Island surcharge on second homes above $1 million also facing litigation, and a Montana law rewarding primary residences while penalizing non-principal ones. The common theme? Tax the home since the jurisdiction cannot tax part-time residents' income.
Councilmember Frumin, who introduced the bill, explained why it was necessary: occupants reside in Washington one day short of the 183-day trigger, instead residing for the majority of the year in low-tax states while purportedly shifting the burden to D.C. resident taxpayers.
Admission Buried in the Bill
Read carefully, that is a significant concession: simply owning a pricey second home in D.C. does not make someone a resident taxpayer. If, as has sometimes been suggested, the statutory residency test in D.C. might require only ownership (or rental) of a place of abode for more than 183 days – regardless of days spent in D.C. – the Council would not need a new property tax to reach such an owner. The Office of Tax and Revenue (“OTR”) could just tax them as residents. A new tax instead acknowledges the statute does not currently reach occupants who fall short of the 183-day in-person test.
Regarding Residency
D.C.'s residency rule has long been an outlier: a resident is anyone domiciled in the District, plus anyone maintaining a place of abode there for 183 days or more, whether they are domiciled there or not. Read literally, physical presence is not required; only that a place of abode is maintained for 183 days or more. This has led some to argue that mere ownership for over six months triggers residency, regardless of time spent in D.C.
But that reading is likely off base. The Office of Administrative Hearings rejected a similar argument from the OTR in Bechtel v. District of Columbia Office of Tax and Revenue, holding “abode” refers to a taxpayer's base of operations or principal residence, not a dwelling the taxpayer happens to own. The ALJ warned that an ownership-only reading would make the statute unconstitutional under the Commerce Clause, deterring multi-jurisdictional ownership and risking residency in multiple states.
So, this bill is a useful, independent data point in the D.C. residency debate because it comes from the Council itself, not a court or taxpayer's advocate. If the Council believed the statute already captured these occupants on ownership alone, this bill would be redundant. Instead, the bill’s framing concedes the opposite: occupants who stay fewer than 183 days and are not domiciled in D.C. fall outside the income tax net, hence the need for a new property tax.
Whatever the case, we might soon need to add D.C. to the list of states and localities looking to harass nonresident taxpayers…and to the list of jurisdictions likely to get sued by said taxpayers!
