The District of Columbia has enacted D.C. Law 26-41, introducing substantial amendments to the city’s treatment of vacant and blighted properties. The law became effective October 1, 2025, with major changes to processes and procedures beginning with tax year 2027. The law expands exemption timelines, modifies appeal rights, creates an expedited permitting process, and significantly revises the tax rate schedule beginning in tax year 2027. These updates aim to incentivize redevelopment activity while providing clearer procedural rights to property owners navigating vacant property designations.
Key Provisions
Extended Cumulative Exemption Periods
The total cumulative exemption window increases from three to five years in any 12-year period, broken down as follows:
- Construction activity: up to three years of exemption
- Pending applications (e.g., BZA or Zoning Commission): up to two years of exemption
- Active sale or lease listings: up to two years of exemption for both commercial and multifamily properties
- Subject pending a probate proceeding or title in litigation: up to three years of exemption
- Properties for which the owner has an active building permit application being reviewed by the District: a period not to exceed half a tax year
These changes provide additional flexibility for owners actively redeveloping or marketing properties.
Expanded Appeal Rights
Vacant property designations can now be appealed directly to the mayor within 15 days of the designation as vacant. The mayor shall issue a notice of final determination within 60 days of the filing of the petition. If the mayor upholds the designation, owners have 45 days to appeal to the Real Property Tax Appeals Commission (RPTAC). Previously, only blighted designations were eligible for RPTAC appeal, making this a notable procedural enhancement for property owners.
Expedited Permitting for Registered Vacant Properties
Properties officially registered as vacant are now eligible for expedited permit review, with a target review period of 180 days. This provision seeks to accelerate rehabilitation or redevelopment timelines for owners seeking to bring properties back into productive use. The following types of permits shall be eligible for the expedited permit review process:
- Demolition
- Raze
- Addition, alteration, and repair
- Alteration and repair
- Sheeting and shoring
- New building
- Trade
New Tax Rates – Effective Beginning Tax Year 2027
Vacant Properties (Class 3)
| Year | Tax Rate |
| First Year | 2% |
| Second Year | 3% |
| Third Year | 4% |
| Fourth Year and On | 5% |
Blighted Properties (Class 4)
| Year | Tax Rate |
| First Year | 4% |
| Second Year | 6% |
| Third Year | 8% |
| Fourth Year and On | 10% |
These escalating rates are designed to discourage prolonged inactivity and encourage rehabilitation or transfer to active use. The new escalating structure is an improvement over the prior tax rate structure of 5% for all vacant designated property and 10% for all blighted designated property.
Tax Abatement for the Redevelopment of Vacant and Blighted Commercial Properties
The mayor may approve an abatement of the tax imposed on a vacant or blighted commercial property if (in part):
- The eligible development cost exceeds $1,500,000
- The abatement would materially assist the redevelopment project
- Ownership enters into an agreement with the District to contract with certified business enterprises
- Execution of a first Source Agreement
- A certificate of occupancy is issued within 24 months (with a possible eight-month extension) from the transmission of the eligibility letter from the mayor
The potential abatement, if approved by the mayor, would be as follows:
- Half the otherwise applicable tax in each of the first six tax years
- Two-thirds of the applicable tax in years seven and eight
- Three-quarters of the applicable tax in years nine and ten
The above, notwithstanding the total amount of the abatement in each fiscal year, shall have a capped amount.
Ryan’s Perspective
The expansion of exemption periods provides meaningful relief for owners engaged in good-faith development, while the new appeal mechanism offers greater due process. However, the escalating tax structure beginning in 2027 may significantly increase carrying costs for properties unable to achieve occupancy within the extended exemption timeline.
Ryan’s Property Tax team recommends that owners and developers:
- Review existing vacant registrations to determine eligibility for extended exemptions
- Track key exemption deadlines to preserve qualification within the new five-year cumulative limit
- Engage with a Ryan expert early to evaluate potential tax exposure and strategic planning opportunities
Next Steps
Ryan professionals are monitoring implementation guidance and will update clients as the Office of Tax and Revenue (OTR) issues administrative rules. For assistance evaluating how these changes affect your property portfolio, please contact the Ryan Washington, D.C. Property Tax team below.
TECHNICAL INFORMATION CONTACTS:
Grant Steinhauser
Principal
Ryan
703.746.0022
grant.steinhauser@ryan.com
Armand Yannone
Senior Manager
Ryan
703.746.0022
armand.yannone@ryan.com
Phil Appelbaum
Director
Ryan
703.746.0022
phil.appelbaum@ryan.com
The material presented in this communication is intended to provide general information only and should solely be seen as broad guidance and not directed to the particular facts or circumstances of any individual who may read this publication. No liability is accepted for acts or omissions taken in reliance upon the content of this piece. Before taking (or not taking) any action, readers should seek professional advice specific to their situation from Ryan, LLC or other tax professionals. For additional information about this topic, please contact us at info@ryan.com.