By RANDOLPH ADAMS
If you’ve been thinking about buying a home in D.C., here are more than $4,500 reasons to consider making the commitment. Among the many options and advantages for first-time homebuyers here is a new tax break.
A reduction in the recordation tax is now available when you buy a property in D.C. A recordation tax is one of the closing costs you may have heard about that all homebuyers pay in the District. Recently, D.C. officials passed a new bill that reduces the recordation tax for first-time homebuyers here by up to 0.725 percent for purchases up to $625,000. That’s up to $4,500 in savings. A maximum of $4531.25 to be exact.
You qualify if you can answer yes to the following questions:
1. Am I, or do I intend to become, a D.C. resident?
2. Is the purchase price of the home $625,000 or less?
3. Do I make less than $139,140 as a single person or $158,940 as couple? (The income limitation rises according to how many family members you have.
Oh no! A confusing application. That sucks. Especially for the many people who were not able to take advantage of this reduction because they did not know about it. This is when having a good settlement agent on your side is important. Your agent can recommend a settlement company or you can find one yourself, but make sure you ask them specifically about this program because it has not been highly publicized.
I didn’t hear about the reduction until my friend told me about it, along with sad stories of a few first-time D.C. homebuyers who missed out on their free money.
“Once you buy a home and you have not applied for the reductions, there are no givebacks. Once you file the deed, it’s over, you lost the opportunity,” says Deirdre P. Brown of Mid-Atlantic Settlement Services, LLC. She is being polite because she knows I’m quoting her. Can you imagine missing out on the closing cost savings? What a bummer.
If you’re still renting in D.C. or moving here, this tax reduction is only one of the few reasons you should think about buying. City officials passed this bill in part to because other jurisdictions have been doing it for years to help with closing costs for first-time buyers. Now is your opportunity. Again, there are many programs to assist first-time buyers and this is one of the biggest.
Gosh, I remember when I was a first-time homebuyer. This reduction in closing cost would have been helpful, but it was not available to me. I almost did not buy my place because I could barely afford it, but am glad I did because it gave me the pride of home ownership. If you have been sitting on the fence and seeing home prices rise, that’s no excuse. I will venture to say the D.C. prices are here to stay, but you can still save on your purchase and build equity for the future.
Randolph Adams is an award-winning realtor with the Randolph Adams Group at Coldwell Banker Residential Brokerage. He can be reached at 202-656-8019 or firstname.lastname@example.org.