Catching up with the First-time Homebuyer Tax Benefit Amendment Act of 2015
First-time buyers and real estate pros in the District of Columbia awaiting word on the status of the First-time Homebuyer Tax Benefit Amendment Act of 2015 can expect to hear a response from the office of Mayor Muriel Bowser this week.
A final version of the bill that would amend the District of Columbia Deed Recordation Tax Act was transmitted to the Mayor’s office Feb. 2, and a response is due by Feb. 16.
The revised transfer tax rule would retroactively go into effect Oct. 1, 2016, according to the final bill, provided the measure is approved by the Mayor and passes the 30-day congressional review period.
As we previously reported, the bill will create a new transfer tax rate of 0.725% for homebuyers who have never purchased a house, condo or share in a cooperative unit in the District of Columbia. The current transfer tax rate for D.C. homebuyers is 1.1 percent on purchases of $399,999 or less and 1.45 percent on purchases of $400,000 or more.
The median home price in the region soared to a record high of $446,000 last summer, the Washington Post reported.
When we checked in last April with the bill known as B21-0417, or the First-time Homebuyer Tax Benefit Act of 2015, it was under committee review and awaiting scheduling for a mark-up. That happened last November.
After a first reading of the of the bill was delivered Dec. 3, 2016, Councilwoman Elissa Silverman (D-At Large) was the only one to vote against the measure, later telling Washington City Paper that because the bill did not specify income limits, the tax break would benefit a homebuyer in Ward 3 five times more than a homebuyer in Ward 8, rendering the benefit "regressive."
Councilwoman Silverman was not the only individual to express this sentiment. The lack of an income restriction has been a concern of the bill’s critics all along.
During testimonies that took place about a year ago, a representative from the D.C. Fiscal Policy Institute said the city would negatively impact its Housing Production Trust Fund, which has produced or preserved more than 8,000 affordable homes since its inception in 2002.
“Rather than provide a new tax benefit for all first-time homebuyers, DCFPI recommends that policymakers review the city’s current deed tax assistance to low- and moderate-income homebuyers and make adjustments if they appear warranted,” said DCFPI Housing Policy Associate Claire Zippel in her testimony last February.
The city regularly alters the income and purchase price restrictions on its popular D.C. Tax Abatement program, and the D.C. Office of Tax and Revenue most recently increased the income and purchase price limitations at the end of last year.
However, the income-restriction concern in regards to B21-0417 was addressed Dec. 13, 2016 when Councilwoman Anita Bonds (D-At Large) introduced an amendment that added two eligibility requirements, an income limit of 180 percent of the area median income as well as proof of District residency.
The median income in D.C. in 2015 was $109,200 annually, so buyers earning up to $196,564 could potentially qualify for transfer tax relief.
The amendment also created a lifespan of four years after the program’s implementation date, at which point the Mayor must submit a report to City Council that reviews the benefits or impact of the tax relief program on homeownership rates.
With the Bonds amendment in place, Council voted unanimously in favor of the First-time Homebuyer Tax Benefit Amendment Act of 2015 on Dec. 20, 2016.
- Tags: Agents | First-time Homebuyers | Legislation | Real Estate | Taxes | Transfer or Recordation | Washington DC