DC Homebuyer Program
D.C. $5,000 Tax Credit (reinstated through 12/31/11 only)
To be eligible for this credit, a buyer must:
- Buy a home in the District of Columbia (one must not have owned a home in D.C. within one year of the qualified purchase) and occupy the property as their principal residence; and
- Meet the following income Requirements:
- Single Filers – with up to $70,000 in modified Adjusted Gross Income (AGI) receive the benefit of the entire $5,000 credit. People with a modified AGI of between $70,000 and $90,000 are entitled to a partial credit. For those with a modified AGI between $70,000 and $90,000 the credit is reduced by $250 for every one thousand dollars over $70,000.
- Joint Filers – with up to $110,000 in modified AGI receive the benefit of the entire $5,000 credit. Couples with a modified AGI of between $110,000 and $130,000 are entitled to a partial credit. For those with a modified AGI between $110,000 and $130,000 the credit is reduced by $250 for every one thousand dollars over $110,000.
The $5,000 credit is not a deduction, but a credit to be applied towards Federal Income Taxes (File Form 8859). If the entire credit cannot be used in the year of purchase, it can be carried over for up to five years.
D.C. Homestead Exemption
To be eligible for the Homestead Exemption, a buyer must:
- Own property in the District of Columbia;
- Occupy the property as their principal residence;
- Be subject to D.C. Income Taxation during the period the property gets the Homestead deduction.
The Homestead Exemption gives the homeowner two (2) important benefits: (1) $69,100.00 is deducted from the assessed value of the residence for purposes of calculating property taxes; and (2) the tax rate applies to the assessment is the lowest tax rate imposed by the D.C. government ($0.85 per $100). To get the exemption, the homeowner must complete and file a Form FR-HD at the D.C. Department of Finance and Revenue. The exemption is not transferable and a homeowner of course may not get homestead deductions on more than one property at a time. Property owner receives the homestead deduction on a prorated basis the first full month following the date of filing of a properly completed form.
D.C. Tax Abatement Program
If buyers meet the following income criterion and their purchase price is $367,200.00 (80% of the median sale price of homes in the District for the prior year) or less, they are also eligible for the Lower Income Tax Abatement program. This program provides for five years of exemption from real property taxes (beginning with the tax year beginning in October following the date of purchase). In addition to this exemption, buyers are exempt from paying their 1.1% Recordation Tax and the sellers™ 1.1% Transfer Tax can be applied as a credit to the buyers in lieu of said tax being paid to the District of Columbia. [D.C. Code 47-3503(a) and (b)] Effective December 11, 2012
Qualifying Income Table
|Persons in Household||Household Income Limits|
Buyers must provide the following documentation to be submitted with the recorded documents in the transaction:
- Completed Lower Income Ownership Exemption Application (FP-420) – provided by Counselors Title, LLC and completed at settlement;
- Copy of Settlement Statement, Sales Contract and FP-7 Form (supplied by Counselors Title, LLC);
- Two (2) most recent pay stubs (within thirty (30) days of transaction);
- W-2 statements for prior two (2) years;
- 1040 Federal Income Tax Return for the prior tax year;
- D.C. Income Tax Return for prior tax year (if applicable).
Senior Citizen or Disabled Property OwnerTax Relief
When a property owner turns 65 years of age or older, or when he or she is disabled, he or she may file an application immediately for disabled or senior citizen property tax relief. This benefit reduces a qualified property owner’s property tax by 50 percent. The following guidelines apply:
- The disabled or senior citizenmust own 50 percent or more of the property or cooperative unit;
- The total adjusted gross income of everyone living in the property or cooperative unit, excluding tenants, must be less than $100,000 for the prior calendar year; and
- The same requirements for application, occupancy, ownership, principal residence (domicile), number of dwelling units, cooperative housing associations and revocable trusts apply as in the homestead deduction.