For the first time in a long time, buying a home in DC has gotten less expensive! While it may not offset rising prices, every little bit helps. In October 2017 a new benefit to first time homebuyers in DC went into effect, reducing the recordation tax that eligible buyers pay when they purchase their first home in DC.
The reduction is between 1-1.3% depending on the sales price, which is not a small amount of money with DC prices being what they are. In my research, there doesn’t seem to be a great deal of information available on this subject, so I wanted to share with you the specifics.
What is recordation tax?
Recordation tax is a one time tax that is paid at settlement on the purchase or sale of a property. This goes by different names and is a different amount in different areas, but in all cases it is essentially a tax on the sale that goes to the state, county or other jurisdiction that is calculated as a percentage of the sales price. This is different from property taxes which are paid annually or semi-annually. Recordation tax is one of the closing costs of purchasing real estate.
In DC, it is customary for a seller to pay the transfer tax and a buyer to pay the recordation tax. Before the first time home buyer (FTHB) recordation tax reduction, the amount paid for the transfer and recordation taxes were equal.
What is the new recordation tax amount?
How to Qualify
This gift doesn’t come without restrictions and is not automatically applied, rather buyers need to apply and qualify for the reduced recordation tax. The application with additional details can be found here. The main requirements include:
- First-Time District Homebuyer
- Either a current DC resident or plan to immediately become a DC resident after purchasing
- Has not owned a residential property in DC
- Income Restrictions
- Calculated by the combined federal adjusted gross income for anyone who will live in the home
- Maximum income limits based on number of people in household
- 1: $139,140, 2: $158,940, 3: 178,740, 4: $198,540
- Eligible Property
- Property purchase price must be $625,000 or less
- Houses, condos and co-ops are all eligible
- Homestead Deduction Application must be included in application
- Applicants must simultaneously apply for and qualify for the Homestead Exemption
- Verifies that the property will be used as a primary residence and owner occupied
How Much Will Buyers Save?
The actual savings will depend on the sales price but let’s look at an example of a property with a sales price of $450,000.
From an email: “Starting this weekend, all Duke’s locations will be offering a bottomless “Tea Time” from 3-6PM which will include all-you-can-drink Hot Toddies, Irish Coffees, Espresso Martinis, and Bourbon…
Friends of the White Whale Society is brought to you by the team behind Hawks*** around Town. You can email your sightings to [email protected] Thanks to KW for sending above…
photo by Tim Brown “Dear PoPville, With the playoffs approaching I am wondering if there are any good bars to watch baseball in the DMV? Specifically, I am wondering if…
If you have any animal/pet photos you’d like to share please send an email to princeofpetworth(at)gmail(dot)com with ‘Animal Fix’ in the title and say the name of your pet and…