District of Columbia taxes capital gains at 10.75%. Combined with federal taxes, your effective rate on a home sale could reach 29.5%.
DC State Rate
10.75%
Top marginal rate
Federal Rate
15%
Most common long-term bracket
Combined Effective
29.5%
On $150K taxable gain (example)
After the $250K/$500K exclusion, here's what a typical seller might owe.
If District of Columbia is where your primary residence is located and you've lived there at least 2 of the last 5 years, you can exclude up to $250K (single) or $500K (married filing jointly) of your capital gain from both federal and state taxes.
Investment and rental properties in District of Columbia don't qualify for the exclusion. You'll owe 10.75% state tax plus federal tax on the full gain, plus 25% depreciation recapture on any depreciation claimed.
In District of Columbia, homes sold in February sell for 6% more than those sold in October (-7%). Timing your sale right can offset a significant portion of your tax bill.
Capital gains tax rates on home sales in District of Columbia and nearby states.
| State | Rate | Tax on $150K Gain | Notes |
|---|---|---|---|
| 5.75% | $8,625 | Top rate; local surcharge possible | |
| 5.75% | $8,625 | Top marginal rate | |
District of ColumbiaYou | 10.75% | $16,125 | Top marginal rate |
Selling in Maryland instead of District of Columbia would save $7,500 in state tax on a $150K gain.
DC taxes capital gains at rates up to 10.75%, one of the highest rates in the nation. The progressive system hits the top rate on income over $1 million.
DC's high property values and strong appreciation in neighborhoods like Georgetown, Capitol Hill, and Adams Morgan create significant gains above the federal exclusion.
DC also imposes a deed recordation tax (1.1% for sales under $400K, 1.45% for higher amounts) and a transfer tax (1.1% to 1.45%) on real estate transactions.
The combination of high capital gains rates and transfer taxes makes DC one of the most expensive jurisdictions for real estate transactions.
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