DC Recordation And Transfer Tax

Author: Susan Isaacs | The Isaacs Team

DC recordation and transfer tax applies to most real estate transactions in the District. Who pays which tax, how much tax stamps cost, and reductions or exemptions for Washington DC home buyers and sellers.

What are Recordation & Transfer Taxes?

Tax Stamps In the District of Columbia 

As part of the sale or transfer of property in Washington DC, the DC Office of Tax & Revenue and Recorder of Deeds impose taxes when transferring property and recording the deed.

Washington DC recordation and transfer tax fees are among the highest individual closing cost line items associated with your real estate transaction, and are among the highest rates in the country.

In most states, transfer taxes in most jurisdictions are levied at less than 1% of property value, often lower. In some states, rates are adjusted for lower-priced homes, and for luxury homes, as they are in Washington DC.

How Much Is It?

District of Columbia taxes are based on the value of consideration given (purchase price) for the property. Where there is no consideration or where the consideration is nominal, the tax is imposed on the basis of the fair market value of the property. Your settlement agent will use Form FP 7/C to calculate the taxes, it is signed by buyer and seller, notarized at settlement and recorded by the recorder of deeds along with the deed and deed of trust.

District of Columbia Deed Recordation Tax

The 2024 rate is 1.1 % of consideration or fair market value for residential property transfers less than $400,000 and 1.45% of consideration or fair market value on the entire amount, if transfer is greater than $400,000.

Applies to all deeds to real estate. The tax is based on the value of consideration given for the property. Where there is no consideration or where the consideration is nominal, the tax is imposed on the basis of the fair market value of the property.

In Washington DC, Deed Transfer Tax

The 2024 rate is 1.1 % of consideration or fair market value for residential property transfers less than $400,000 and 1.45% of consideration or fair market value on the entire amount, if transfer is greater than $400,000.

Based on the consideration paid for the transfer. Where there is no consideration or where the amount is nominal, transfer tax is the fair market value of the property being conveyed.

Take Note

  • Buyer pays Recordation Tax
  • Seller pays Transfer Tax
  • Recordation and Transfer Tax amounts are equal
  • Some reductions and exemptions may apply

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Who Pays What?

The seller typically pays the transfer tax and recordation tax is the responsibility of the buyer, however this can be negotiated.

In the 2024 GCAAR sales contract, the arrangement described above is the default case “unless an alternate arrangement is agreed to by the parties as part of the written agreement.”

Cooperatives Economic Interest Deed recordation tax is divided between the transaction Parties.

New construction contract terms for recordation and transfer tax payment can vary by developer and project. Often, the developer will bind payment of the transfer tax to the buyer’s use of the developer’s title company and lender. It’s important to read contract provisions relating to DC recordation and transfer tax carefully before signing any contract.

CONTRACT TERMS

First Time Buyers

To exercise the option for the First Time Homebuyer Recordation Tax Reduction, ensure that your GCAAR Sales Contract includes the provision as a selected option on the Jurisdictional Addendum form, Page 2, Section 2D.

CONTRACT TERMS

Economic Interest

According to the GCAAR Sales Contract, Jurisdictional Addendum, Page 2, Section 2B; “Cooperativces; Economic Interest Deed Recordation Tax will be split equally between Buyer and Seller. There is mo Transfer Tax for cooperatives.”

CONTRACT TERMS

Who Pays What

Payment responsibility for DC recordation and transfer tax is outlined in the GCAAR Sales Contract Jurisdictional Addendum, Page 2, Section 2A, which states: “Real Property; Recordation Tax will be paid by Buyer and Transfer Tax will be paid by Seller.”

Reductions And Exemptions

DC First Time Home Buyer Reduction

Recordation tax reduction for first-time homebuyers in DC

The District of Columbia offers a reduced Recordation Tax rate for qualifying first-time homebuyers.

  • For houses and condominium units, the recordation tax rate is 0.725%;
  • For transfers of economic interests in a housing cooperative unit, the recordation tax rate is reduced from 2.2% to 1.825% for units under $400,000, and from 2.9% to 2.175% for units $400,000 or greater.

Transfer tax paid by sellers is unaffected by this program.

Provisions

Residency: The program applies to those who are, or intend to immediately become, a DC resident and “first-time District homebuyer”. This is defined as the applicant never having owned a house, condominium unit, or economic interest in a cooperative unit that qualified for the District’s homestead deduction as the applicant’s principal place of residence.

Income: To be eligible, the buyer must have a qualifying income at or under the program’s 2024 limits. For instance, a single occupant household income can not exceed $189,900. A two-person household can not exceed $217,080., and a three person household can not exceed $244,260.

Purchase Price: The purchase price of the property or cooperative shares can not exceed $730,000.

Homestead Deduction: Only properties and purchasers qualifying for the DC Homestead Deduction will receive the tax reduction.

For additional information on eligibility, see OTR Tax Notice 2017-7.

How To Apply

An application for the reduced rate must be made at the time the deed is offered for recordation. The reduced rate cannot be applied for after the deed is recorded. Only one application form is required per deed. The applicant for the reduced tax rate must use the version of application Form ROD 11 available on the Recorder of Deeds website.

To claim the reduced recordation tax rate, applicants must: (1) complete the current version of the application form (Form ROD 11); and (2) submit documentary evidence.

Applications are subject to audit after the deed is recorded. If additional tax is due as a result of the audit, the grantee(s) of the deed will be responsible for payment of all tax, interest and penalties owed. A. Form ROD 11- Reduced Recordation Tax Rate for First-Time District Homebuyers.

Purchase Money Deeds

Code § 42-1102(5) exempts from the recordation tax: A purchase money mortgage or purchase money deed of trust that is recorded simultaneously with the deed conveying the real property for which the purchase money mortgage or purchase money deed of trust was obtained.

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