Who pays the tax
is a term, not a law.
For a buyer or seller writing or answering an offer on a DC row house near $1M. If you are buying a co-op unit, the tax rates here are not yours.
What are the closing costs on a $1M house in DC?
The city's share alone is $29,000. DC charges a deed recordation tax and a deed transfer tax, each 1.45% of the full price: $14,500 apiece on $1M. By custom the buyer pays recordation and the seller pays transfer. Lender, title and settlement charges come on top, and they vary by company.
| Item | Rate | On $1M | Who pays, by custom |
|---|---|---|---|
| Deed recordation tax | 1.45% of the price | $14,500 | Buyer |
| Deed transfer tax | 1.45% of the price | $14,500 | Seller |
| Recording the deed | Flat fee | $30 | Buyer |
| Recording the deed of trust | Flat fee | $150 | Buyer |
| Property tax, October 1 to closing | $8,500 a year | $1,421 | Seller credits buyer |
Who pays the recordation tax and the transfer tax?
Whoever the contract says. Custom puts recordation on the buyer and transfer on the seller, but both are negotiable. A seller who agrees to cover part of the buyer's recordation tax is moving money across the table, the same as a credit. Write it into the offer, not into the closing statement afterward.
Is the 1.45% rate charged only on the part over $400,000?
No. OTR applies 1.45% to the entire price once a transfer is $400,000 or more. Below $400,000, the rate on a residential transfer is 1.1%. On $1M, each tax is $14,500.
Do first-time DC buyers pay less recordation tax?
Not on a $1M house. The reduced rate of 0.725% applies only under a purchase price ceiling and household income limits that OTR publishes on Form ROD 11. The ceiling sits well under $1M. Under it, the buyer must apply when the deed is recorded, and the saving cannot be shared with the seller. At the reduced rate, a qualifying purchase pays half the recordation tax.
Who pays the property tax for the year of the sale?
Both, by the day. DC's tax year runs October 1 to September 30, billed in halves due March 31 and September 15. At a fall closing nothing has been paid yet, so the seller credits the buyer. On a house assessed at $1M, the tax is $8,500 a year. A December 1 closing puts 61 days on the seller: a credit of $1,421.
What else does the buyer pay at closing?
The lender's charges, title insurance, the settlement fee, and prepaid insurance and interest. The city adds $30 to record the deed and $150 to record the deed of trust. Your lender must send a Loan Estimate within three business days of your application. Compare two of them line by line before you write an offer.
What does a seller pay out of a $1M sale?
The transfer tax of $14,500, the commission in the listing agreement, the seller's settlement charges, the property tax credit, and the payoff of any loan. Any credit you agree to give the buyer comes out of the same proceeds. Model every one before you set the asking price.
Read next: the tax bill you will pay after closing and how fast DC row houses sell.
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Send me every sale on my blockSources. DC Office of Tax and Revenue, Recorder of Deeds FAQs (deed recordation and transfer tax rates; recording fees), Form ROD 11 (first-time buyer rate) and Real Property Tax Rates. D.C. Code Title 42, Chapter 11 and Title 47, Chapter 9. Consumer Financial Protection Bureau, Loan Estimate timing.
This page explains rules and practice; it is not legal or tax advice. For a specific house, talk with a DC real estate attorney or a tax professional.