Household income a factor on DC Tax Abatement application

“My wife and I are buying a property for our son in Washington, DC The purchase price is $445,000, so we heard that we might be eligible for the DC. Tax Abatement Program. Is this possible, and if so, what might we have to do to make sure we qualify?”

This is a question our attorneys hear pretty frequently. Income of all household members is used to determine eligibility, even if a household member that is living at the property is not on the title of the property.

Often when purchasers have adult children that still live with them, they fail to realize that the child’s income counts toward household income. After all, the parents are typically not factoring in the child’s income for the loan, so it is easy to neglect including it in the tax abatement application.

Any household member over the age of 18 must either submit pay stubs from their current employer or provide an affidavit stating that they are not working (or proof that they are a full-time student if that is the case).

The key component is household income. If the parents are not going to live at the property, they do not count as household members. Only the son’s income will count, since he will occupy the property as his principal residence.

Keep in mind that the son must be on title to the property, must be a party to the sales contract and must occupy the property as his principal residence. The parents will have to sign an affidavit at closing stating that the property is not going to be their principal residence and the sole purpose of their being on title was to assist their son in obtaining a loan.

With this affidavit, D.C. will not consider them as household members, and the son can enjoy the benefits of the DC Tax Abatement Program.