DC TAX ABATEMENT

The DC Tax Abatement program is designed to assist lower income DC residents in reaching their home ownership goals. In a typical transaction, the buyer pays a recordation tax of either 1.1% or 1.45% of the sales price and the seller pays an equal amount as a transfer tax to DC. If a buyer qualifies for the DC Tax Abatement program, the buyer is fully exempt from paying the DC recordation tax.  And, instead of the Seller paying the DC transfer tax, the amount they would have paid is given as a closing cost credit to the Buyer. But wait, it gets better! A buyer who qualifies is also exempt from paying property taxes for the next 5 full fiscal years after they purchase.

How Do I Know If I Qualify?

The program has certain income and sales price requirements that must be met. Currently, the maximum sales price to qualify for DC Tax Abatement is $464,000. The current income limit is $65,100 for the first person in the home and $74,400 for a two-person household.  Note that these amounts are subject to change. If the Buyer meets those guidelines, they must intend to live in the property as their principal residence and be a current DC resident. The application process requires proof of income for all of the people who will be living in the home.

Property Tax Benefits

It is important to remember that the exemption from paying property taxes ends if the household income exceeds the program’s limits.  If at any time during the 5 year period after closing, your income increases over the limit, it is the homeowner’s responsibility to inform The DC Office of Tax and Revenue. Failure to properly notify them within 30 days of the change in income may result in fines and penalties.