Transfer / Recordation taxes in DC large portion of closing costs

By January 8, 2013 Uncategorized

Closing costs in DC, like other jurisdictions, include lender charges, settlement fees and title insurance premiums as well as prepaid items like lender escrow reserves, pre-paid interest and real estate tax pro-rations.

But the biggest ticket item you will find on your closing disclosure statement on the day of closing will be the District of Columbia’s transfer/recordation taxes. In DC, it is customary for the seller to pay the transfer tax and the buyer to pay the recordation tax.

For more details on transfer and recordation taxes read our guide on paying transfer / recordation taxes. To see how much these taxes and other closing costs will affect your bottom line, get a free Quick Quote for closing costs from our website.

The chart below shows how the tax increases from 1.1% to 1.45% for both parties on properties over $400,000.

Guide to DC Closing Costs (Transfer and Recordation Taxes)

Purchase/Sale Price Buyer Pays Seller Pays
$0 – $399,999 1.1% of Purchase/Sale Price 1.1% of Purchase/Sale Price
Over $400,000 1.45% of Purchase/Sale Price 1.45% of Purchase/Sale Price

DC Tax Abatement Program lowers closing costs for some

As a homebuyer, if you earn less than a certain income and the purchase price of your property is less than $464,000 you may qualify for a popular District homebuying program in which you exempt from paying recordation tax at closing and you receive an allowable credit of 1.1% from the seller, equal to the transfer tax.

This could mean a huge savings on your closing costs as a homebuyer, so it’s worth the time to read up on the program. Beyond the closing table, you’ll be exempt from paying real property taxes for 5 years beginning the next full tax year after filing if you qualify for the program.

To qualify for DC Tax Abatement you must provide a lot of documentation, including 2 years of income taxes and W-2s and your last two pay stubs. You must also be able to prove you are “domiciled” in the District of Columbia.

Visit our DC Tax Abatement program guide for the most up-to-date information.

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