DISCLOSURE: The facts provided in this article are for informational purposes only and are deemed accurate at the time it was published. For the most updated information, visit the website of the DC Office of Tax and Revenue.
When you buy a home in Washington, DC, the number of different fees and taxes you pay can be overwhelming. One tax that will most likely apply to you is the DC Transfer and Recordation Tax. Learn the facts about this expense and your obligation to pay it.
What is DC Transfer and Recordation Tax?
The transfer and recordation tax is collected by the DC Office of Tax and Revenue (OTR) when there is a real estate transaction in the District. This tax covers the transfer of the title from the seller to the buyer, as well as the work it takes to record the deed with the OTR.
The transfer and recordation tax fee will be one of the highest fees you pay during your closing. The amount of tax collected depends on the sales price of the property. The party responsible for paying these fees can be negotiated by the seller and the buyer, but typically the seller pays the transfer tax and the buyer pays the recordation tax.
The current transfer tax rate is 1.1% of the sales price for residential property transfers less than $400,000 and 1.45% of the sales price when it is greater than $400,000.
The same rates apply to the recordation tax. If the sales price of the property is less than $400,000, then the tax will be 1.1% of the sales price while transfers of $400,000 or greater have a tax rate of 1.45%.
Are There Any Exemptions to the Transfer and Recordation Tax?
There are a number of statutory exemptions which lead to exemption or reduction in transfer and recordation taxes. The ones that may apply during a purchase transaction on a primary residence are listed below.
D.C. First-Time Homebuyer Recordation Tax Discount
If you are purchasing your primary residence in the District for the first time and meet the rest of the following qualifications, you could reduce your recordation tax at closing to 0.725%.
Home sales price does not exceed $632,500.
Income does not exceed the threshold, found in this document.
D.C. Low Income Tax Abatement
If your household income and property purchase price qualify, we can help you apply for the Lower Income Homeownership Exemption Program.