Transfer tax relief coming for first-time homebuyers in DC
First-time homebuyers in the District of Columbia can look forward to a lower transfer tax rate at the closing table starting this fall, provided the City Council votes in favor of the “First-time Homebuyer Tax Benefit Amendment of 2015” as it is expected to do.
A new transfer tax rate of 0.725% for first-time homebuyers would go into effect on Sept. 30, 2016, according to the bill that is sponsored by councilmembers Jack Evans (D-Ward 2), David Grosso (I-At Large) and Anita Bonds (D-At Large).
To obtain the benefit, a signed affidavit must be provided at closing essentially stating that the buyer is a first-time homebuyer and the unit will be his or her principal residence.
The current transfer tax rate for homebuyers varies depending on purchase price from 1.1% for purchases of $399,999 or below to 1.45% for purchases of $400,000 or more.
This amendment would not be the District’s first attempt at offering tax relief to would-be homebuyers. Up until the 2012 tax year, qualifying buyers were eligible for a $5,000 tax credit when they filed their taxes in April. That program had been in existence since 1997 before it was canceled.
Another popular tax program that’s still going strong in District is the tax abatement program.
The First-time Homebuyer Tax Benefit Amendment will take effect following approval by Mayor Muriel Bowser and is subject to a 30-day congressional review.