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Expert Interview on the Washington DC Tax Sale Process with Donald Dinan

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Tax Sale Resources
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Click to download the complete white paper from Donald Dinan of Goetzfitpatrick on the Washington D.C. tax sale process.

Introduction

Washington D.C. has had an interesting past concerning its delinquent property tax collection, but in 2001 the city started offering a tax sale to private investors rather than selling to an established trust.  In 2014, the city underwent some significant statutory changes that “added protections for taxpayers, particularly the elderly and homeowners.”  As with any state, Washington D.C. has a set of rules for its tax sale process.

Interview Summary

A tax lien sale is held once per year historically in the summer months.  Since the changes in 2014, the size of the sale has become relatively small but here are some key points to remember:

  1. A lien is attached to a property as soon as it becomes delinquent and has priority over all other liens aside from federal government liens.
  2. Anything that is considered owner occupied, residential and has less than $2500 in taxes owed, is exempt from the tax sale.
  3. Other liens may be included in the delinquent amount at sale.
  4. The Office of the Tax Revenue (OTR) conducts the sale after sufficient notice has been made by the city.
  5. This is a bid up premium sale meaning the sale price starts at the amount owed in taxes and goes up in a bidding war at the sale.
  6. Interest is not earned on the overbid but an 18% rate of return can be earned on the delinquent amount depending on the overbid amount.
  7. Any subsequent tax liens purchased earn the full 18% percent.
  8. A required 20% deposit of projected purchase price is required before participation at the sale.
  9. There is a one-year redemption period on the parcel and a notice to foreclosure must be filed before the one year redemption period is up.

Conclusion

Most pieces of the tax sale process in the District of Columbia are fairly cut and dry, but it’s important to understand all the noticing and filing requirements for the tax foreclosure process prior to the one-year redemption period expiration. To understand all the elements to the tax sale process in Washington D.C. read Donald Dinan’s white paper.  You can also find more information about D.C. from Charles Gormly in his interview about Maryland and the District of Columbia.

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