DC's 5% conversion fee
The District charges a conversion fee of 5% of the sale price of each unit in a converted building. Whether it applies to your project, and to which sales, is one of the most consequential questions in a conversion.
How the fee works
The fee is calculated on each unit's sale price and comes due after that unit settles. Across a building with several units, it adds up to a meaningful share of the project's margin.
When it does not apply
Not every conversion pays it. Properties that qualify as Not a Housing Accommodation are exempt altogether. There are also exemptions tied to the buyer, including sales to lower-income households, to seniors, to buyers with disabilities, and to tenants who lived in the property before the conversion.
What drives the answer
For most developers the fee turns on the property's history and on decisions made early in the project: how the building was occupied before you bought it, what can be documented about that, and how the project itself is permitted. Those choices are often made by people who are not thinking about the conversion fee at all.
Where it goes wrong
- Leaving the fee out of the acquisition budget and meeting it at the settlement table.
- Making permitting decisions without asking how they affect the fee.
- Assuming an exemption applies without the documentation to support it.