Real estate taxes factor in homebuying decision
The spring real estate season is upon us, which means a stream of homebuyers will once again be wondering where is the best market to buy. As you help your homebuyer make that decision, you may want to consider the tax factor.
A lot of folks think real estate taxes across the board are always higher in DC compared to Maryland or Virginia. While it’s true transfer (recordation) taxes paid at settlement are higher for DC purchases, those homebuyers pay a far lower annual property tax rate compared to Maryland and Virginia thanks to the Homestead Deduction.
If your homebuyer intends to stay put and use the property as a primary residence for 10 years or more, it’s cheaper from a real estate tax standpoint to buy in DC based on today’s calculations. The breakdown is summed up in the chart. Of course, there are many other factors your homebuyer will take into consideration when choosing where to buy. When it comes to real estate taxes, your homebuyer should determine how long he or she intends to stay in the property, if the property will be used as a primary residence and if he or she is comfortable paying more taxes up front at settlement.
Another way your homebuyer can lessen the blow to their pocket book at closing is to take advantage of our REAL Credit™, which has saved our clients more than $8 million over the last 10 years.Breakdown of DC, MD and VA property, transfer taxes