The Week In Review: October 27th, 2026

The Cost Of NOT Calling DC 'Home'

There is a particular kind of Washington buyer who wants a home here but doesn't necessarily need one.

They may live primarily in New York, Florida or elsewhere. They may have a foothold in Washington for work, family, politics or simply because they enjoy being here. They buy a beautiful West End condominium, a Georgetown townhouse or a Kalorama apartment.

These buyers represent a small but important segment of our luxury market. And DC is considering making it considerably more expensive for them to own here.

Councilmember Matt Frumin has introduced a pied-à-terre tax targeting certain residences assessed above approximately $2.56 million that do not qualify for DC's homestead deduction. His proposal would tax qualifying properties at $2.50 per $100 of assessed value.

What does that mean in dollars?

A $3 million property currently carries approximately $26,000 in annual DC property taxes. Under the proposal, that bill could increase to $75,000. On a $5 million property, taxes could increase from approximately $46,000 to $125,000 annually.

Suddenly, pied-à-terre sounds considerably less French glamour and considerably more expensive.

To be clear, this is not law. The Council is considering competing proposals, and the ultimate structure and rates remain unsettled.

New York enacted a similar tax earlier this year, and the rollout has been a mess. Approximately 17,000 owners received notices, a public list identified more than 900,000 potentially affected properties, and a judge ordered the city to restart portions of the process. The city appealed, staying that order. Confusion, lawsuits and uncertainty followed.

Ironically, New York's experience might have given Washington a marginal competitive advantage in attracting affluent buyers seeking a second residence. Instead, DC is contemplating a similar approach.

And the timing is particularly challenging. It comes at a moment when our luxury buyer pool is thinning, and I am seeing buyers circle properties longer before deciding whether to land. At the upper end, where the number of qualified buyers is inherently limited, even one fewer bidder can make a difference.

A second-home buyer has an additional advantage: the purchase is discretionary.

Someone considering a $4 million Washington condominium can just as easily continue staying at a hotel, rent when needed or spend that money elsewhere. An additional five-figure annual carrying cost may be enough to change the equation.

None of this suggests that a pied-à-terre tax would suddenly undermine luxury property values. But markets operate at the margin. One fewer buyer, one less competing offer or one owner choosing not to purchase can influence the price of the next transaction.

Washington needs a strong tax base and a vibrant residential market. The challenge is balancing revenue needs against the potential consequences of discouraging the very buyers who contribute to both.

Let's not forget: these buyers have a particularly easy alternative. They don't have to buy here.

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