The sale of co-ops, technically a transfer of an economic interest rather than transfer in title, is not currently taxed by the District of Columbia; the proposed law would add an "economic equivalent" tax at the same rate as the transfer (tax on the seller) and recordation (tax on the buyer) taxes currently imposed by the District. While co-ops represent only a small fraction of real estate transactions, the District reckons it could pull in an additional $5m to $6m per annum for the next few years with the additional tax burden, compared to the $118m the District siphoned from transfer and recordation taxes last year.
The absence of recordation taxes is one of the few incentives to buying into a cooperative, most of which have more onerous rules than condominiums, carry underlying obligations to the purchaser, and bestow on the Board of Directors the power to reject applicants, all of which tends to suppress the price of co-ops below that of an equivalent condominium. The tax would take effect next year. In other words, sell now.