The District has experienced a staggering 50% decline in the taxes it collects when real estate is bought, sold or transferred compared to last fiscal year, according to monthly estimates from the Office of the Chief Financial Officer, and the blame does not solely fall on the struggling commercial sector.
The $251.6 million D.C. generated from October through June, the first nine months of fiscal year 2023, in gross deed recordation and transfer taxes is $264.1 million less than it collected during the same period last fiscal year, per the CFO’s office.
The numbers reflect a massive drop-off in overall real estate activity, which might not be a huge surprise given the stifled commercial real estate market and a housing market slowed by rocketing prices and unusually high interest rates. Through June, there were roughly 2,600 fewer residential transactions and 70 fewer commercial transactions than during the same period in 2022.
And those transactions are producing less tax money on average. The average tax collected on 154 commercial transactions through June was $369,940, compared with $841,693 on 221 transactions through June 2022, per the OCFO. The average tax on 5,367 residential transactions through June was $35,544, down from 7,952 transactions averaging $40,270 in taxes per transactions last year.