To protect your data from being shared with affiliates, opt-out

To protect your data from being shared with affiliates, opt-out

You would be surprised at how many people I meet at the settlement table who have never opted out of their information being shared with their bank’s or lending institution’s affiliates.

People often complain about solicitations via mail, email and phone. If you have a credit card, bank account or mortgage with a lending institution, they are often allowed to share your information with their affiliates unless you specifically ask them not to share.

I hear, “I don’t want to be on the phone for hours waiting to opt out.”

Most of the institutions allow you to set up an account online to handle payment and inquiries. Usually there are privacy settings in the same online account you can set up – opt out of their marketing to affiliates, sharing credit information, etc.

If you would rather be on the phone, you can certainly call and opt out of your information being shared with affiliates or used for marketing. Just a few minutes of your time may save you hours sorting mail and/or emails.

How to qualify for the DC Tax Abatement program

DC Tax Abatement (updated in 2018)

The DC Tax Abatement program is designed by the District of Columbia to help lower-income homeowners. Below are some often asked questions from agents and potential homebuyers. 

What does the DC Tax Abatement program entitle me to do?

Assuming you qualify, you are exempt from paying transfer and recordation taxes. This means not only are you exempt from the recordation tax; but customarily, the seller’s transfer tax is credited to you at settlement.  You will also be exempt from paying real property taxes for 5 years beginning the next full tax year after filing.  

What are the qualifying factors to get DC Tax Abatement?

The qualifying factors for DC Tax Abatement are as follows:

  • The purchase price of the property must be $456,000.00 or less;
  • The income threshold – max gross income – must be  

 PERSONS IN HOUSEHOLDS/INCOME LIMITS    

           1./$63,060

            2./$72,060

            3./$81,060

            4./$90,060

            5./$97,320

            6./$104,520

            7./$111,720

            8./$118,920

 

  • The property must be a principal residence; and
  • The purchaser must be domiciled in the District of Columbia.

 What does “domiciled” in the District of Columbia mean?

 To be domiciled in the District of Columbia you must (a) get a DC government issued ID such as a DC Driver’s license; (b) register to vote in DC; and (c) file DC Personal Income taxes.  Please note: the purchaser can obtain/do the above mentioned after the purchase.

What documents are required to get the Tax Abatement?

The documents usually required are:

  • Last 2 years income taxes;
  • Last 2 W-2s;
  • Last 2 paystubs.

If there are any extenuating circumstances i.e gaps in your employment, self-employment, etc., the District of Columbia may require additional documentation from you before approving the abatement application.

Who files the documents so I can get tax abatement?

The settlement agent files the required documents along with the settlement statement and sales contract when recording the deed after closing.

I am in the military, does my housing allowance count as income despite it being non-taxable income?  Do I need to change my State of Legal Residence?

Yes. The DC Recorder of Deeds looks at all sources of income, not just taxable income. 

Yes, you need to be domiciled in the District of Columbia which includes filing DC income taxes. You can fill out and file a form DD2058 to change your residency to the District of Columbia.

How do I know that my tax abatement application was approved?

The settlement company handling your closing will know immediately because your deed will go on record without transfer and recordation taxes. You will also receive a letter from the District of Columbia confirming that you qualified for the tax abatement and giving the years you will be exempt from property tax.

If I qualify for tax abatement, why is my lender still collecting taxes in escrow? 

The real property tax exemption does not start until the next full tax year.  In other words, if you settle in April 2018 and the tax period for 2018 is October 1, 2017, through September 30, 2018, you will not be given the exemption until the 2019 tax period. You will be required to pay real property taxes for April through September 2018. Your real property tax exemption will start 2019 and finish 2024.

 What happens if my situation changes – am I required to report it to the District?

The answer is Yes. If your household income increases or you decide to rent the property rather than using it as your principal residence, you must report it to the District. Until recently, nothing was specifically stated in the application.  The updated application now specifically states “If the household ceases to qualify for the Lower Income Homeownership Exemption, it is the responsibility of the owner to provide written notification to OTR’s Special Programs Unit within 30 days of the change in eligibility. Email This email address is being protected from spambots. You need JavaScript enabled to view it. . This means individuals must keep up with the annual thresholds for the tax abatement program and self-report any changes. This also means individuals must notify the same unit if they are no longer living in the property as their principal residence. 

 If your questions about tax abatement have not been answered here, please feel free to contact me 202.362.1500 ext 1514. 

Close It!™ House of the Week: Fabulous location, condo in Dupont Circle

This week we’re strolling over to Dupont Circle to check out a unique and appealing condo on the penthouse level of a boutique building. List price is $449,000.

This updated 1BR / 1BA unit features modern wood cabinets, high-end appliances and loads of closet space. The community is a hidden gem with a residential entrance tucked away on quiet Corcoran Street, NW. The new owner of this home will also enjoy sunny western exposures and a fabulous location that’s steps away from shopping, restaurants, culture and nightlife.

Assuming a homebuyer puts down 20 percent on a conventional loan, her cash to close number will be approximately $104,020.86. Monthly payments will then be around $2,296.99 including the HOA fee. For a complete picture of the cash to close, including the seller’s side of a transaction like this, try the Web version of Close It™ or download the free Close It™ iOS app.

What’s the status on B21-0417, aka The First-time Homebuyer Tax Benefit Amendment Act of 2015?

Legislation that would offer tax relief for District residents buying DC real estate is currently under committee review and awaiting scheduling for a mark-up, a spokeswoman for the Council's Committee on Finance and Revenue said.

Known as the First-time Homebuyer Tax Benefit Amendment Act of 2015 (B21-0417), the bill would 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. It would go into effect Sept. 30, 2016.

During mark-up, which is a vote in the Committee to send the bill before the whole Council, the Committee will have an opportunity to amend the bill (or not) and will also have a chance to review a financial impact statement to analyze costs and revenues of the proposed legislation.

If the bill passes mark-up, it will go to Mayor Muriel Bowser for a signature before going to Congress for review and passive approval. If it fails mark-up, the bill will get kicked to the Committee of the Whole and added to the agenda for the next legislative meeting.

Impact on low- to moderate-income residents a concern

The Council held a public hearing about the bill on February 10 of this year, which is when Settlement Observer picked up on the story. Then on February 24 a representative from the DC Fiscal Policy Institute testified before the Committee about concerns regarding a lack of income restrictions and the impact the tax cut would have on the city’s Housing Production Trust Fund.

“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.

The bill was introduced last October by councilmembers Jack Evans (D-Ward 2), David Grosso (I-At Large) and Anita Bonds (D-At Large).

Grosso acknowledged concerns regarding the economic impact of lowering the transfer tax rate across the board and, in particular, how such a deduction would affect the Trust Fund.

“I am committed to working with my colleagues to ensure that the [Trust Fund] receives annual commitments so that it is not dependent on yearly fluctuations in recordation tax revenues,” Grosso said in a statement.

Mayor Bowser’s budget proposal last year included $100 million for the Trust Fund in fiscal year 2016, according to the website of the Coalition for Nonprofit Housing & Economic Development. The Trust Fund is administered by the DC Department of Housing and Community Development with support from the Coalition.

The Trust Fund “enables non-profit housing providers, mission-driven for-profit developers and renters wishing to exercise their Tenant Opportunity to Purchase rights to improve and develop affordable housing in all eight wards,” according to the Coalition’s website.

Since its inception in 2002, The Trust Fund has produced or preserved more than 8,000 affordable homes with upward of 2,000 more in the pipeline, according to the Coalition’s website. In addition the Trust Fund has created an estimated 10,000 short-term and permanent jobs and has helped more than 18,000 DC residents.

The District's homebuying taxes significantly higher than Maryland or Virginia, about 50% higher on average

Current DC transfer and recordation taxes are on average 50% higher than neighboring Maryland and Virginia, Grosso said in a statement, which was the impetus for introducing a bill that would lower the tax burden for homebuyers purchasing for the first time in the District.

Transfer tax rates for District properties vary depending on the purchase price, from 1.1% for purchases $399,999 and below to 1.45% for purchases of $400,000 or more. The tax payment is traditionally paid by both the buyer and seller.

The DC tax abatement program offers relief for some, but homebuyers must satisfy income, purchase price and other restrictions and provide documentation to qualify.

Tax abatement waives the recordation tax obligation for low- to moderate-income first-time homebuyers while also crediting the seller’s portion of the tax to the homebuyer, resulting in a 2.2% swing in favor of the homebuyer. In addition, a qualifying homebuyer is exempt from paying property taxes for the first five years of ownership, but again some restrictions apply.

“If policymakers are concerned that the current deed tax assistance programs are inadequate, the District should look to modify existing programs while keeping a focus on low- and moderate-income families, rather than adopt another tax break that has no income targeting,” Zippel, the housing policy associate, said in her testimony.

We will continue to monitor the story, and readers can also follow along on the Council's website.

Close It!™ House of the Week: Sophisticated urban living in LeDroit Park

We're swanking things up for this week's installment and checking out a luxurious Victorian semi-detached home that's achieved centenarian status in LeDroit Park. This home went on the market this week for $1.249 million.

This house offers two decks that overlook a private yard that is large enough for entertaining. In addition to 3 bedrooms and 2.5 bathrooms, this house also has an English basement that can be rented out to supplement the mortgage payment.

Assuming a homebuyer puts down 20 percent on a conventional loan, her cash to close number will be approximately $284,417.34. Monthly payments will then be around $5,461.90 per month. For a complete picture of the cash to close, including the seller's side of the transaction, try the Web version of Close It™ or download the free Close It™ iOS app.

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Our blog contains general information only, not intended to be relied upon as, nor a substitute for, specific professional advice. Rate tables and figures that appear on our blog are deemed reliable but not guaranteed. For current rates & policies, refer to our Quick Quote and Consumer Guide. We accept no responsibility for loss occasioned to any purpose acting on or refraining from action as a result of any material on our blog.