Paying taxes on rental / BBL for a nearly-compliant basement apt.?

[che...@smartergrowth.net]

I received this request from a homeowner - If anyone has some advice on where this person can look for help. 

^^^^^^^^^^^^^^^^^^^^^

Hi all,

I'm hoping to receive advice/input to the following predicament.

I did a modest remodel to my semi-detached home's basement last year and have been renting it out since April. It's beautiful but not quite compliant b/c the ceilings are just under 7 feet and I'm not certain if it has fire separation. For this reason, I did not obtain a Certificate of Occupancy and figured I'd simply rent it out as a room by keeping the kitchen door upstairs open at all times and report the income at tax time. My tenants are wonderful and appreciative of a modern, safe, affordable space. This week I went to report the income and learned that I need to file a Form 30 b/c I made more than $12k. And in order to file the 30, a BBL is required. Now that I'm researching the BBL for single-family units, it looks like I'll need an inspection after all and I'm freaking out - to put it mildly. 

Does anyone have any advice here? What do the scores of amateur landlords do in this city at tax time?!

The unit is in a semi-detached home with a separate entrance, has a simple Ikea kitchen (no dishwasher), and shares the same heat zone/electric panel with the house. 

Many thanks.

[Ileana Schinder]

Hi There,

I see several issues from an infrastructure and a license perspective. Below are you my points and how to address them:

• Bedroom. You need 7'-0" clear for all living spaces as defined by the Building Code, if your bedroom does not have 7'-0" is NOT a bedroom and no inspector will approve it as a living space at all even if you comply with the other code requirements (smoke detectors, egress, etc). You may want to explore how to address this ASAP.
• Income. DC allows for homeowners to SHARE their property for profit with renters. They have a very welcoming way to allow roommates to live together legally. Explore a business license where different adults share a house legally. the inspector will look for different requirements (not ADU requirements) 
• DCRA (and the building code for that matter) do not allow for grey areas, you either have an ADU (2 dwellings in one property) or not (multiple rooms in one dwelling). Based on your description you fall under the second option, make sure you follow the paperwork (forms, taxes, etc) understanding that you have roommates, NOT renters.  

I hope this clarifies... 

ileana, the architect

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[Dana Powell]

At an Adu form last year  in Cleveland Park there was some discussion of whether dcra prohibits a second kitchen in an in-law suite in a single family dwelling.  

Dana Powell

To view this discussion on the web visit https://groups.google.com/d/msgid/adudc/CAPzHPzNmFBXKhPm2a9LwG%2BwgsU114FAJsb-L9ojh1M2_3dBUTg%40mail.gmail.com.

[Kevin Horgan]

I spoke with DCRA a couple years ago about this. What defines a "kitchen" is whether or not there is a stove. I often see developers/flippers install "wet-bars" in the basements of row homes. Clearly, the basement is setup as a rental unit or for AirBnB. The basement kitchen has everything except the oven. If DCRA even sees a 220V or a gas line heading anywhere near the "wet-bar" area, they will know that you intend to install a stove and your project will be judged under *very* different standards for separate dwelling units. You are then required to meet all the requirements for a dwelling unit - to included the ceiling height, fire-rating between units, fire-egress, no shared air from HVAC systems, etc. You could chat with the DCRA homeowner's center, but honestly you probably need to chat with a DC-licensed architect because the required drawings are quite detailed. I understand this isn't good news, but the regulations are there to protect you and your family in the event of a fire in the basement apartment. 

A side anecdote: I'm going through my own basement dwelling permitting right now, and I can tell you it's significant. I now understand why most developers *almost* build legal basement apartments. Unless they intend to sell two units, there is no financial justification to build the basement unit to dwelling code. There is significant design, permitting, and building expense. A developer can make nearly the same ROI with a basement that's 95% there, but it could quickly cost them another $100K to give you a property that could pass an inspection to get your C-of-O and BBL. 

Regardless of what you decide to do for your basement, you need to pay your tax. It's one thing to mess with DCRA. It's an altogether different thing to avoid the tax concern. 

Good luck, 

Kevin

On Tuesday, April 2, 2019 at 12:31:14 PM UTC-4, Dana Powell wrote:

At an Adu form last year  in Cleveland Park there was some discussion of whether dcra prohibits a second kitchen in an in-law suite in a single family dwelling.  

Dana Powell

On Tue, Apr 2, 2019, 11:26 AM Ileana Schinder <i...@ileanaschinder.com> wrote:

Hi There,

I see several issues from an infrastructure and a license perspective. Below are you my points and how to address them:

• Bedroom. You need 7'-0" clear for all living spaces as defined by the Building Code, if your bedroom does not have 7'-0" is NOT a bedroom and no inspector will approve it as a living space at all even if you comply with the other code requirements (smoke detectors, egress, etc). You may want to explore how to address this ASAP.
• Income. DC allows for homeowners to SHARE their property for profit with renters. They have a very welcoming way to allow roommates to live together legally. Explore a business license where different adults share a house legally. the inspector will look for different requirements (not ADU requirements) 
• DCRA (and the building code for that matter) do not allow for grey areas, you either have an ADU (2 dwellings in one property) or not (multiple rooms in one dwelling). Based on your description you fall under the second option, make sure you follow the paperwork (forms, taxes, etc) understanding that you have roommates, NOT renters.  

I hope this clarifies... 

ileana, the architect

On Tue, Apr 2, 2019 at 10:51 AM <che...@smartergrowth.net> wrote:

I received this request from a homeowner - If anyone has some advice on where this person can look for help. 

^^^^^^^^^^^^^^^^^^^^^

Hi all,

I'm hoping to receive advice/input to the following predicament.

I did a modest remodel to my semi-detached home's basement last year and have been renting it out since April. It's beautiful but not quite compliant b/c the ceilings are just under 7 feet and I'm not certain if it has fire separation. For this reason, I did not obtain a Certificate of Occupancy and figured I'd simply rent it out as a room by keeping the kitchen door upstairs open at all times and report the income at tax time. My tenants are wonderful and appreciative of a modern, safe, affordable space. This week I went to report the income and learned that I need to file a Form 30 b/c I made more than $12k. And in order to file the 30, a BBL is required. Now that I'm researching the BBL for single-family units, it looks like I'll need an inspection after all and I'm freaking out - to put it mildly. 

Does anyone have any advice here? What do the scores of amateur landlords do in this city at tax time?!

The unit is in a semi-detached home with a separate entrance, has a simple Ikea kitchen (no dishwasher), and shares the same heat zone/electric panel with the house. 

Many thanks.

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Ileana Schinder, Architect

AIA, LEED AP BD+C

Certified Passive House Consultant

i...@ileanaschinder.com
202-431-6760

http://www.ileanaschinder.com

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[Ileana Schinder]

To clarify,

DCRA is VERY strict with homeowners attempting residential renovations and the potential to create a semi-legal ADU within their property. I can't speak for flippers but for me, as a residential architect they look for even the smallest hint of a --potentially- illegal ADU and they make sure the ADU is removed. Whoever is doing your designs, make sure they pay attention to regulations by zoning AND structural... from the stove to the length of the corridor, EVERYTHING will be questioned. Nothing is strictly prohibited but you must know how to distribute the equipment and fixtures to show that you won't rent it in the future.

Feel free to reach out if you have specific questions about the design, documentation and permitting of additional dwelling units.

Cheers

ileana

[Jenny Coneff]

Hi all,

I understand that DCRA's regulations and/or interpretations have changed particularly in the past 2 years and that kitchens have been a major point of discussion. I am converting my basement to an ADU in R3. I understand that, with appropriate fire protection between units and other boxes ticked, DCRA now allows a full kitchen in a basement ADU. Does anyone know of a regulation prohibiting gas ranges in ADUs in R#?

Best,

Jennyc.

[Ileana Schinder, PLLC]

Hi jenny,

There is NO regulation or ban on a particular fuel type fir stoves in kitchens. You can have it gas or electric. 

Feel free to reach out if you need clarification on this. 

All the best,

Ileana, the architect

Pardon per le tpyo. Sent from a iphone.

On May 10, 2021, at 8:45 PM, Jenny Coneff <jco...@gmail.com> wrote:

Hi all,

To view this discussion on the web visit https://groups.google.com/d/msgid/adudc/4998087b-6374-47ea-a366-3bf7c8e634f0n%40googlegroups.com.

[Ileana Schinder, PLLC]

True that. 

I never reccomend gas for new construction. Especially for adus. 100% electric is so much easier and sustainable! 

Pardon per le tpyo. Sent from a iphone.

On May 10, 2021, at 9:09 PM, Erik Hoffland <er...@erikhoffland.com> wrote:



True, Ileana, but wouldn't the gas stove have to be on a separate gas service (i.e., Jenny would have to put a separate gas meter on her property)? 

Jenny--FWIW, I almost always advocate for all electric appliances/utilities in ADU's, they are safer and a good hedge against the future--there are several jurisdictions in California that have already banned fossil fuel equipment (furnaces, stoves, water heaters, etc.) in new residential construction.

Thank you,
Erik

Erik Hoffland AIA, LEED AP

Hoffland Architects
1810 Kilbourne Place NW
Washington DC 20010
er...@erikhoffland.com
202.234.7795 office

202.320.8408 mobile

To view this discussion on the web visit https://groups.google.com/d/msgid/adudc/A5626EEE-1464-4430-9460-B94BF119F04A%40ileanaschinder.com.

[Cheryl Cort]

Yes, new electric stove technology is highly efficient, less polluting both inside your home & in terms of greenhouse gas emission. You might need to get new pots, but it's worth it. 

I too recommend the new electric stoves. 

_____________________________ Cheryl Cort | Policy Director Coalition for Smarter Growth Mobile: 202-251-7516 (e) che...@smartergrowth.net | www.smartergrowth.net  Twitter @betterDCregion | @cherylcort Your gift helps keep CSG's advocacy going! Donate today!

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[Ileana Schinder]

my main point is that there is nothing in the building or zoning code that influences the fuel of cooking appliances.

the code DOES require that you have a full functioning kitchen... but it also doesn't say how big it has to be. A single burner, a mini oven and a sink with an undercounter refrigerator is, in fact, a kitchen. :)

hugs

ile

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PS: Did you see us featured in The Washington Post?! 

ileana schinder, Architect

AIA, LEED AP BD+C

i...@ileanaschinder.com
o: 202-381-7463 / c: 202-431-6760

http://www.ileanaschinder.com

[Erik Hoffland]

True, Ileana, but wouldn't the gas stove have to be on a separate gas service (i.e., Jenny would have to put a separate gas meter on her property)? 

Jenny--FWIW, I almost always advocate for all electric appliances/utilities in ADU's, they are safer and a good hedge against the future--there are several jurisdictions in California that have already banned fossil fuel equipment (furnaces, stoves, water heaters, etc.) in new residential construction.

Thank you,
Erik

Erik Hoffland AIA, LEED AP

Hoffland Architects
1810 Kilbourne Place NW
Washington DC 20010
er...@erikhoffland.com
202.234.7795 office

202.320.8408 mobile

On Mon, May 10, 2021 at 9:02 PM Ileana Schinder, PLLC <i...@ileanaschinder.com> wrote:

To view this discussion on the web visit https://groups.google.com/d/msgid/adudc/A5626EEE-1464-4430-9460-B94BF119F04A%40ileanaschinder.com.