Home / Capital Gains Tax in District of Columbia
Capital Gains Tax in District of Columbia
By Priya Raman
DC isn't a state, but its capital gains rate acts like one of the highest.
DC isn't a state, but its capital gains rate acts like one of the highest.
The District of Columbia isn't a state, but it taxes capital gains at up to 10.75%, a rate that lands closer to California's than to most of its neighbors. Combined with the federal 20% and the 3.8% NIIT, a seller can lose up to 34.5% of the gain.
DC's 10.75% top rate applies to capital gains the same way it applies to ordinary income, with no separate lower bracket for long-term holds. See the full figure with depreciation recapture folded in through the capital gains tax calculator.
A 1031 exchange defers the entire 34.5% by reinvesting into a qualifying like-kind property rather than taking the proceeds in cash. Work through your numbers in the 1031 exchange calculator and set your deadlines with the timeline calculator.
District of Columbia sellers weighing their options can also read 1031 exchange vs. paying capital gains now and what a qualified intermediary does.