We often receive calls asking to add or remove an individual from the deed or title to a property. People are often shocked to find out that, depending on the type of transfer, there may be a Recordation and Transfer Tax involved, even if there is no money changing hands.
Here are some frequently asked questions that I have encountered over the years in regards to this type of transaction:
I was recently married and want to add my new spouse to title, will this be taxed?
Whether you were recently married or married 50 years ago, adding or removing a spouse from the title to a property is exempt from Recordation and Transfer taxes.
I have a partner and would like for his name to be added to the deed. How much will this cost?
It depends. Domestic partners are exempt from paying Recordation and Transfer taxes, but they must provide proof of their committed relationship by registering as a Domestic Partnership with the Department of Health.
If proof of this registration is provided, Recordation and Transfer taxes will be exempted and the only cost will be for Deed preparation and recording. If you are unable to provide this proof, Recordation and Transfer taxes will be due as well.
How much are the Recordation and Transfer taxes?
Once again, it depends, but this time it will depend on the assessed value of the property and the percentage of ownership being transferred.
If the assessed amount of property to be transferred is less than $400,000, the tax will be 2.2%.
If the assessed amount of property to be transferred is $400,000 or more, the tax will be 2.9%.
So, if there currently is one owner, and she is adding a non-exempt individual to title, the city will view it that she is transferring 50% ownership, so if the property is assessed at $500,000, the tax would be computed as follows: 50% of $500,000 = $250,000 x 2.2% = $5,500.00.
I want to add my grandchild to the Deed; will that trigger Recordation and Transfer taxes?
No, transfers from parents to a child or grandparents to a grandchild are exempt. It is exempt in the other direction as well.
What about if I add my brother to title?
The District of Columbia does not recognize an exemption for sibling transfers, so adding or removing a sibling will be a taxable transaction.
We recently set up a revocable trust and would like for the property to be moved into the trust. Will this be taxed?
As long as the individual transferring the property is also the beneficiary of the revocable trust, there will not be a Recordation or Transfer Tax due.
Where can I find more information on this subject?
I want to go ahead and move forward with the Deed change, what should I do next?
Contact an attorney at Federal Title & Escrow Company (email@example.com or 202-362-1500) and we can prepare the paperwork for you and record the Deed.