DC Franchise Tax and rental property in DC

Rental real estate is subject to DC franchise tax as any other business. The primary tax consideration with real estate is that it’s typically a disaster tax wise if it’s held by a corporate entity, so LLC’s, partnerships and individual ownership are generally the preferred method of ownership.

You are subject to unincorporated DC franchise tax if gross rental income exceeds $ 12,000. While there is no 80% personal services exemption, you can subtract up to 30% for owner services – this amount must be reduced by any fees paid to an outside management company.