DC Tax Abatement program revisited
This past November my business partner, Joe Gentile, blogged about how household income factors into the DC Tax Abatement program. However, since I received two inquiries just this past week from real estate agents, I thought it would be useful to re-visit this subject.
Yes, it’s hard to believe but true — Bill Gates (worth $56B) could buy a DC house for his son and receive a closing cost credit from DC equal to 1.1% of the sales price AND not have to pay real estate taxes for five years after closing. Let’s chalk it up as an unintended consequence of a DC law. Ironically, the statute (or law) is entitled "Lower Income Homeownership Tax Abatement" and is intended to assist lower income citizens with the purchase of a home.
Under the law, if Bill Gates buys a DC property, with his son added to the title as a co-owner, for a purchase price of less than $408,000, and his son earns an income of less than $57,120, then the property will qualify for the program.
The benefits of the program provide an exemption from the 1.1% DC Recordation Tax; allow the seller to credit the Gates family with the 1.1% DC Transfer Tax (otherwise and typically paid by the seller to DC); and exempts the property from real property taxes for a five-year period.
Under the above scenario, Bill Gates would simply need to sign a "Non-Occupant Affidavit" to accompany the program application stating that while he is a co-owner (along with his son) of the property, he will not be occupying or living at the property.
Seem fair? You decide.
Editor's Note: This article was updated on 08 January 2016.