When you buy a home in Washington, D.C., in most cases the city collects a recordation tax from the buyer — 1.1% of the purchase price under $400,000 and 1.45% if the price is above $400,000.
This makes up a big portion of the buyer’s closing costs and is paid up front at closing. But it’s possible to get this tax reduced significantly for those who qualify. The D.C. First-Time Home Buyer Recordation Tax Reduction reduces this to just .725% of the purchase price. That’s some BIG savings!
How to qualify for the D.C. First-Time Home Buyer Recordation Tax Reduction:
- Buying your first home in D.C. — This is to encourage new home ownership; you cannot have owned a principal residence in D.C. before.
- The home must be your primary residence w/homestead deduction — No investment properties or second homes. You have to live there.
- Purchase price not to exceed $647,000 — Regardless of what the loan amount is, you have to stay under this price point to qualify.
- Annual household income within limits — For a single individual making no more than $154,000. For a couple, the max income is $174,780.
Want to learn more about this and other ways to save money on your home purchase? Check out our Home Buyer Tips Blog.