do you have a rental property in the district of columbia?

DO YOU HAVE A RENTAL PROPERTY

IN THE DISTRICT OF COLUMBIA?

FREQUENTLY ASKED QUESTIONS

I rent a property or a portion of my

property in the District of Columbia.

Am I considered a business for DC

tax purposes?

Yes. In the District of Columbia, rental

income is considered business income.

All businesses should register with OTR by

filing a form FR-500 on MyTax.DC.gov.

Registration is required and ensures that

payments and returns properly post to a

taxpayer’s account.

Are there additional returns that are

required to be filed for individuals

with rental income?

Yes. Rental properties should file

Personal Property Tax returns (FP-31).

Rental properties may be liable for Sales

and Use tax or Occupancy tax, if the tax is

not collected by a marketplace facilitator

(such as AirBnB, VRBO, etc.). In addition,

there may be additional filings required if the

taxpayer is a trust, partnership, or if other

circumstances are met. It is important to

consult with a tax professional if you have

any questions about your tax filings.

I report my rental income on a federal

Schedule E, which allows me to

report any income or losses associated

with my rental real estate on my federal

individual income tax return. Does the

District of Columbia allow me to report

these items on my District individual

income tax return?

No. The District requires that rental

income over a certain threshold and

related losses are reported at the entity level.

If you have gross rents over $12,000 per year

and you are not a corporation, you are

District residents who own properties that they rent out should know that there may be

specific provisions in the District tax code that they should be aware of in order to

ensure that they are correctly reporting their income and expenses and that they are

paying the correct amount of tax due.

considered an unincorporated business and

must file an Unincorporated Franchise tax

return (Form D-30). You should not include

income or losses related to rental real estate

on your District individual income tax return.

Rental losses will be reflected on your

entity-level return and will not reduce your

individual income in the District. If your

business is a corporation (including an

S-Corp), you should file a Corporate

Franchise Tax return (Form D-20).

Yes. Rental properties should file

Personal Property Tax returns (FP-31).

Rental properties may be liable for Sales

and Use tax or Occupancy tax, if the tax is

not collected by a marketplace facilitator

(such as AirBnB, VRBO, etc.). In addition,

there may be additional filings required if the

taxpayer is a trust, partnership, or if other

circumstances are met. It is important to

consult with a tax professional if you have

any questions about your tax filings.

I rent my property as a short-term

rental, which allows a host to offer

lodging at their primary residence while

the host is present on the property, or as

a vacation rental, which allows a host to

offer lodging at their home for 90 or fewer

nights per year without being present in

the residence. What are my tax

obligations in order to be eligible for a

Short-Term Rental or Vacation Rental

License from DCRA?

While DCRA may have additional

requirements, tax-related requirements

include the requirement that the owner is

eligible for the Homestead Deduction and

that the owner must obtain a Certificate of

Clean Hands.

What are the requirements for the

Homestead Deduction?

You must own the District home that you

live in, and you must not own property

elsewhere with a homestead exemption or a

primary residential credit. In addition, you

must apply for the Homestead Tax Credit in

order to receive it; you can apply for this

benefit on MyTax.DC.gov.

Note that if you are receiving the Homestead

Tax Credit and you move out of your home,

even if you are still the legal owner, you must

report this change to OTR in order to remove

your Homestead Tax Credit once you no

longer qualify. If it is determined through an

audit that you were not entitled to this credit,

the credit can be removed retroactively, and

you will have to repay any benefits you

improperly received.

What are the requirements for a

Certificate of Clean Hands?

In order to get a Certificate of Clean

Hands, the applicant must not owe the

District government more than $100 and

must have filed all required District tax

returns. In addition, businesses must have a

valid registration on file. For eligible

I do not live in the District but own a

home in the District that I rent out. Do

I have a tax filing obligation?

If your gross rents for a property located

in the District of Columbia exceed

$12,000 per year, you are considered a

business and must file an entity-level return

to report your business income and/or

losses, even if you are not domiciled in the

District yourself.

applicants, a Certificate of Clean Hands can

be instantly generated on MyTax.DC.gov by

either logging in to an existing MyTax.DC.gov

account (for District residents) or by using

the non-login option on the MyTax.DC.gov

homepage (for non-District residents).

RENT

In order to get a Certificate of Clean

Hands, the applicant must not owe the

District government more than $100 and

must have filed all required District tax

returns. In addition, businesses must have a

valid registration on file. For eligible

What can I do to obtain a Certificate of

Clean Hands if I am non-compliant?

If you are deemed to be non-compliant

with your District tax obligations, you

will not be able to generate a Certificate of

Clean Hands instantly on MyTax.DC.gov and

you will need to review your notice of

non-compliance, which will give you

additional information on what you may be

missing. If your notice of non-compliance

states that you have unfiled tax returns or a

balance with the Office of Tax and Revenue,

you will need to correct the issue before a

certificate can be issued. OTR recommends

that you file missing returns as soon as

possible, since the returns will need to be

processed before your compliance status

can be updated. If you owe a balance of

more than $100 you must either satisfy the

balance or have a payment agreement in

good standing before your compliance

status can be updated.

What can I do to correct my filings if I

have not been properly reporting my

rental income on an entity-level return?

If you realize that you have not

reported, misreported, or underreported

your District rental income or losses, you

may be able to obtain relief from penalties

by voluntarily coming forward to bring your

accounts into compliance through the

Voluntary Disclosure program. The Voluntary

Disclosure program allows for a waiver of

the penalties with the payment of the tax and

interest, as well as a limited lookback period.

You may be eligible for this program if you

have not been contacted by OTR or its

representatives (including the Multistate Tax

Commission or a third-party bill collector

contracted by OTR). You can submit a

request for a Voluntary Disclosure

Agreement on MyTax.DC.gov anonymously,

if you choose; however, submissions must

be approved by the Audit Division.

applicants, a Certificate of Clean Hands can

be instantly generated on MyTax.DC.gov by

either logging in to an existing MyTax.DC.gov

account (for District residents) or by using

the non-login option on the MyTax.DC.gov

homepage (for non-District residents).

General Questions?

Customer Service Administration:

202-727-4TAX (4829)

Questions about MyTax.DC.gov?

E-Services: 202-759-1946

CONTACT INFORMATION

Questions about bills, collections, or for the Clean

Hands Unit?

Collections and Enforcement Administration:

202-724-5045

Office of the Taxpayer Advocate: 202-442-6348

Or you can send a web message through MyTax.DC.gov.