DC First-Time Homebuyer Recordation Tax Reduction

By October 17, 2019 Purchase, Taxes

Below Are The Updated (October 2019) Requirements To Qualify For A Recordation Tax Reduction:

  • The purchase price can’t exceed $647,000.
  • Total household income doesn’t exceed the below thresholds:
    Persons In Household Household Income Limits
    1 $153,000
    2 $174,780
    3 $196,560
    4 $218,340
    5 $235,980
    6 $253,440
    7 $270,900
    8 $288,360
  • Each grantee (i.e., homebuyer taking title) has never owned a principal residence in the District.
  • The property is improved residential property and qualifies for the DC Homestead Deduction. Note: Be careful here. Qualifying for the DC Homestead Deduction is not simply a statement provided by the homebuyer(s) that they will occupy the property as a principal residence – read more.
  • As a further complication, since the enactment only applies to real property that qualifies for the homestead deduction, this means that the reduction would not apply to the value of unimproved lots (e.g., condo parking spaces or out-lots). For transactions involving unimproved lots, this may require sales contracts to specify an apportioned value (not simply total purchase price) for both the homestead deduction qualifying lot, as well as, the non-qualifying lot. In other words, the full recordation tax of either 1.1% or 1.45% would be assessed on the value of the lot that does not qualify for the homestead deduction.

What is the DC First-Time Homebuyer Recordation Tax Reduction?

The DC first-time homebuyer recordation tax is generally reduced to 0.725% from the customary 1.1% or 1.4%.

Who Is A DC First-Time Homebuyer?

A “DC first-time homebuyer” is defined as an individual purchaser who has never owned eligible property as the individual’s principal residence. DC Official Code § 42-1101(16). The term also includes an individual who has divorced or separated and who, by a written settlement agreement or court order, did not obtain an ownership interest in a principal residence that had previously been jointly owned.  In order for a deed to qualify for the reduced rate, each grantee named in the deed must be a first-time District homebuyer.

Do You Qualify as A First-Time Homebuyer?

Use our Guaranteed Quote Tool will answer that question for you!  

 

For more information on income limitations and the DC first-time homebuyer recordation tax reduction, please see the Office of Tax and Revenue’s page here.

 

Updated: October 2019

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