Navigating the D.C. Property Assessment Appeal Process in 2024

The District of Columbia (D.C.) reassesses all real property annually. The basis for assessment is “Estimated Market Value,” defined by statute as 100% of the most probable price the property would be expected to sell on the market under “prevailing conditions.” For owners of office property, this should mean a reduction should be in store given the overall market in general and D.C. in particular.

The well-documented work-from-home and hybrid work phenomena have resulted in increases in cap rates, higher vacancy, and lower market rents in office properties caused by weakening demand. All these factors constitute “prevailing conditions,” suggesting a year-on-year decrease in value is warranted. Taxpayers who do not see their assessed values drop for their office properties should consider an appeal even if long-term tenants occupy a building. For example, an office building worth $19 million on January 1, 2023, would have lowered in value to $17 million on January 1, 2024 with no changes to the net operating income. This would reduce the property tax burden by $35,000 just based on increasing cap rates, higher vacancy rates, and lower market rents.

The deadline to appeal a property in D.C. is April 1. To start the process, McGuire Sponsel can work with the property owner to file the first level of appeal. This initial appeal will be for internal review by the assessor’s office. Frequently, this first-level appeal will be denied unless there is a calculation error or some other error. Fortunately, a second level of appeal is available to taxpayers. The Real Property Tax Appeals Commission (RPTAC) decides the second-level appeals. Within 45 days of the decision of the initial administrative review with the assessor, the aggrieved taxpayers should file a petition to the RPTAC.

Unlike the initial appeal, the RPTAC is a neutral body, although the burden of proof to demonstrate the incorrectness of any assessment will remain on the taxpayer. At the hearing, the taxpayer can and should present evidence suggesting a lower value, such as appraisals. The taxpayer or representative should receive a copy of the value decision in writing within 80 days for a commercial property.

McGuire Sponsel’s Property Tax team will develop a valuation analysis using three approaches. This work product is not a formal “appraisal” but sufficient to achieve value reductions. Additionally, we will file the appeal paperwork and present the evidence to the RPTAC while attacking the assessor’s evidence at the hearing.

McGuire Sponsel is dedicated to supporting our CPA partners and their clients throughout the entire appeal process. We provide guidance and assistance during all phases, from conducting due diligence to communicating the lien date, appeal window, and appeal process. Our top priority is ensuring fair and accurate tax valuation, and we advise our clients accordingly based on what is best for them, whether it means settling or proceeding to the hearing level. With our extensive experience working in various states across the country, we provide realistic expectations and transparent communication throughout the entire appeal process.

Contact McGuire Sponsel’s Property Tax Services team with any questions on the D.C. appeal process and timeline.