DC First Time Home Buyers – Listen up!

Starting October 1st, the DC Recording tax will be reduced to 0.725% for first-time homebuyers. Qualifying is not as simple as Maryland’s first-time homebuyer exemption; whereby, each homebuyer must simply be a first-time homebuyer of a principal residence to qualify. This enactment also imposes a few additional hurdles, including purchase price limitations and limits on household income.

In general, the recordation tax will be reduced to .725% if:

  • Each grantee (i.e., homebuyer taking title) has never owned a principal residence in the District.
  • The property is improved residential property and qualifies for the DC Homestead Deduction. Note: Be careful here. Qualifying for the DC Homestead Deduction is not simply a statement provided by the homebuyer(s) that they will occupy the property as a principal residence
  • The purchase price cannot exceed $625,000.00. Note: This purchase price threshold may be subject to an annual adjustment.
  • Total Household Income (including all grantees named in the deed and possibly renters) does not exceed 180% of Area Median Income (AMI). Currently, this equates to a threshold of approximately $198,500.00 in total household income. Note: The AMI is annually adjusted by HUD.
  • As a further complication, since the enactment only applies to real property that qualifies for the homestead deduction, this means that the reduction would not apply to the value of unimproved lots (e.g., condo parking spaces or out-lots).

Let’s save you some money if you’re planning a DC home purchase!