Frequently Asked Questions (FAQ)

District of Columbia

Who needs a Rental Property License?

DC law states that any property owner no matter what the property type (condo, coop, row house, single family, apartment building or rooming house) are required to have a Basic Business License. The basic business license is the formal name for the Rental Property License.

Montgomery County, MD law states the same as DC that any property owner no matter how many or few units they own must have a Rental Property License.

How long is a license good for?

A Rental Property License is good for two years.

When getting the license doesn’t this mean I am subject to Rent Control?

No, not automatically. Instead it depends on the number of units you own. If you own more than four units you are subject to rent control and must apply as such on the RAD form. In addition, if you you are an LLC, Corporation, Partnership or any other ownership form besides an individual person you are automatically subject to rent control no matter how many or few units you own.

What is Rent Control?

For those landlord’s who own more than four units you should be aware that the law governs how much you may raise rent on an annual basis. Each jurisdiction is different. DC is based on the Consumer Price Index while other places are based on an exact percentage amount. Contact your local Rental Housing Administrator about what the actual increase can be.

How long does it take to typically get a Rental Property license?

Typically most of our clients get thru inspections in a week or less from the date we receive the completed filings back from you. However this timeline can also be longer in some cases depending on the speed of the Government inspection office. At high traffic times it has taken as long as three weeks to get an inspection.

Feb 2011 Update: Unfortunately the timeline to get thru the process has greatly changed. While the filing still only takes a day the length of time to get an inspection is on average of 3-4 weeks. Upon passing the inspection you can expect the license to be received in the mail about 2-3 weeks following the approval.

I am currently renting out my property but do not have the license. If I apply now will I be fined for non-compliance?

We have processed over 1000 application of which most have been for Landlords who have already rented out their properties. In our experience we have never had a Landlord fined for non-compliance. DC has consistently told us they do not fine Landlords who are trying to come into compliance but that is their authority. Our lawyers do tell us we cannot say "no" with complete certainty to this answer as that is the purview of DC Government and is beyond our control.

I want to rent my English basement apartment but live upstairs. Am I required to have a license?

The short answer is YES. You are required to have a 2 Unit License. You will also have the requirement to have a valid Certificate of Occupancy. The Certificate of Occupancy certifies that the building met building codes when the property was built. We know many homeowners do not have this and in most cases have not clue about this document.

Contact us immediately so we can research whether or not there is a previous Certificate of Occupancy on file for your property. We do charge $50 for this service but credit it to you if you decide to proceed with the license. Should a previous Certificate of Occupancy be on file we will contact you. At that time you will have the option to apply for an Ownership change and a new Certificate of Occupancy will be issued in your name. (DC does charge a filing fee for this which in most but not all cases is included in the price of the license fee) From there we can begin the process as normal.

For homeowners who live in the upstairs unit DC law does require you to have a Home Occupation Permit. While we as a company do not agree with this as it is not required if the upstairs and downstairs were rented it is required. We will gladly take care of this filing as well for you but will incur an additional costs. We simply charge the filing fee as required by DC government. Since we disagree with this requirement we offer our time free when filing for this specific permit.

The Home Occupation Permit is a permit that allows a business to operate out of a residential dwelling. This is really meant for home based businesses to regulate how much of a residential dwelling is operated by a business and how many employees they may have on the property.

I live out of the state. Do I have to have a Registered Agent?

Yes. The law in all 50 states states that if an owner lives outside of the jurisdiction they must appoint a legal resident agent for legal servings. You may appoint an individual so long as they have an address within the jurisdiction. As an individual this must be a residence and cannot be their office address. You may also appoint a lawyer or certified Registered Agent corporation to receive legal servings on your behalf.

Do I have to pay taxes on rental income?

Typically yes but you should consult your tax adviser. According to the IRS and most local Tax offices you must declare rental income. In the District of Columbia if you make over $12000 in GROSS income you will need to declare and this should be included on a Schedule D30 form with your annual DC taxes. Your tax adviser will be best able to answer this question as well as give details on potentially how much. If you do not reside within DC you are still required to file the D30 form. In this case consult your tax professional on how declarations should be made to your home state.

By Applying For a Rental Property License will my property taxes increase?

In many cases yes. Typically homeowners receive a homestead deduction which is deducted from the assessed value before the tax computation is made. This amount varies by jurisdiction. By switching your property to a rental property you would typically no longer be eligible for the homestead deduction and thus your tax base would increase to the full assessed value. Owners of row homes with English Basements but residing in the upstairs should continue to receive a homestead deduction although it may only be applied to the value of the unit in which you live.

I am renting out a room or two in my own property. Am I required to have a license?

Only if you have more than 4 tenants. Instead of a Rental Property License you are required to have a Boarding House License. We can handle these as well but you will need to contact us directly for pricing and process.

I own 4 condos in a 4 unit condominium. What type of license do I need?

You will need 4 separate 1 family residence licenses. Since your properties are legally considered condos and not an apartment building you are not eligible for the Apartment License. If you simply own a 4 unit apartment building which was never LEGALLY separated as condos then you will need an Apartment License.

What is the Unincorporated Business Franchise Tax?

In the District of Columbia, when applying for the Basic Business License you are considered a business although you may be a single owner. The tax you pay on the rental income is called the Unincorporated Business Franchise Tax.

What do inspectors look for at the compliance inspection?

Click here for the checklist used by DC Government inspectors.