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.

Fewer hands in the pie means more pie to go around

Happy Pi Day! What better day than Pi Day to remind homebuyers about all the hands in their "pie" so to speak when it comes to real estate closings.

It's no surprise that everyone wants a piece of the proverbial pie, from the real estate agent's commission to the lender's fees to the government's taxes and, yes, even the title company's charges.

Having to share some of your pie is a fact of life. Having to give up all of your pie is a tragedy of life.

Just like homebuyers, we don't like having to give up our entire pie. That's why we have held firmly as an independent title company – we will not share our pie, or profits, with referral sources through Affiliated Business Arrangements or Marketing Service Agreements.

Not all title companies feel the way we do. They happily share their pie with their referral sources because they believe they can make it up by taking more pie from unassuming homebuyers. Unfortunately, they are often right.

Homebuyers who understand how much dough is at stake, however, are often surprised by the cost difference between one title company to the next. When made fully aware of these differences, most homebuyers choose to spend less.

With fewer hands in the pie, as our company founder Todd Ewing likes to say, there's more pie for everybody. In this case it means a cost savings of up to $750 for our clients.

The cost savings we extend to our homebuyers is part of our revolutionary REAL Credit™ program, which reflects costs passed through to consumers who close with other, affiliated title companies. To date, the cost savings hovers above $8 million.

That's a lot of pie.

Close It! House of the Week: Completely transformed in Glover Park

Close It! House of the Week: Completely transformed in Glover Park

This week we're looking at a 4-bedroom, 4.5-bathroom attached row house in the Colonial style with a fully finished basement that can be used as an in-law suite or a rental to help offset the mortgage. It's near the Naval Observatory in Glover Park, and it's listed at $975,000.

This house features two massive decks, a fantastic kitchen with pantry and a beautiful exposed brick wall in the entry way. It includes two parking spaces, and there's a Whole Foods and Starbucks nearby.

Click here for more photos.

Assuming a homebuyer puts down 20 percent on a conventional loan, her cash to close number will be approximately $$223,117.96. Monthly payments will then be around $4,219.40 per month.

For a complete picture of the cash to close on any property in the D.C. metro area, including the seller's side of the transaction, try the Close It™ Web app or download the free Close It™ iOS app.

Headlines: The real estate roller coaster; 7 mortgage myths debunked

Here's a look at what's happening in real estate in the District of Columbia and beyond. 

Buying trumps renting in Washington

A Washington resident making the region's median household income is spending an average of 18.1 percent of monthly income on a mortgage payment, according to report from Zillow. Renters are spending an average 27.1 percent. -Washington Business Journal

DC region's housing market remains stalled

According to data released Wednesday by RealEstate Business Intelligence, a subsidiary of MRIS, sales of homes in the D.C. metro region fell to 3,036, a decrease of 1 percent compared to November 2013.  -Washington Post

Renting is twice as expensive as buying: Zillow

On average, homebuyers making the nation’s median income and purchasing the typical U.S. home spend 15.3% of their income on their monthly house payment, down from the historical norm of 22.1% during the pre-bubble period from 1985 to 1999. -Housing Wire

3% down payments may be a game changer

Mortgage giants Fannie Mae and Freddie Mac announced Monday that first-time home buyers can now qualify for loans with down payments as low as 3 percent. That will expand credit for qualified home shoppers who may have been sidelined the last few years because of higher down-payment requirements, housing analysts say. -Realtor Magazine

7 myths millennials believe about mortgage lending

Millennials are forecasted to be a driving force in housing in 2015, with the majority of them being first-time homeowners. -Housing Wire

Real estate agent builds roller coaster house tour (video)

Dutch real estate broker Verder met Wonen found the perfect way to give tours to potential homebuyers: send them for a ride on a custom-built roller coaster through the house. -Distractify

5 marketing ideas for real estate agents from Close It!™

The best real estate agents are constantly on the look-out for ways to better market themselves to their home buyers.

And while the latest report shows it's 34% more affordable to buy versus rent in the DC metro area, many would-be homebuyers remain on the fence

How can you get these homebuyers off the fence – and then convince them to buy the fence along with the house that comes with it? Here are 5 ways Close It!™ can help you market your real estate business:

1. Follow up with clients by sharing Close It!™ in your email, social media or blogging campaigns. 

You've already got a database of email addresses, Facebook page likes and Twitter followers. Perhaps some of those contacts are would-be homebuyers who aren't quite sure if they can really afford to buy a house. Reach out to them about the only app in the region that calculates a homebuyer's total cash to close. It's a fun and useful tool that lets them crunch the numbers any way they want. 

2. Customize your Close It!™ reports with photo and contact info.

You're already working with several prospective homebuyers who no doubt have lots of questions about how much everything is going to cost in the end. Follow up on last weekend's house tour with a set of HUD-1s custom branded with your professional photo and contact information. Your homebuyers will be impressed when you outline every cost for them down to the penny.

3. Appeal to the foreign investor market.

If you're working in neighborhoods like Georgetown, Foggy Bottom and the West End, it's quite possible you've worked with foreign investors or that you will at some point. Did you know that sellers who do not participate in the U.S. tax system must pay the IRS a tax of 10% of the sales price for all properties over $300,000? A surprise like that at closing could cost you a client, or worse yet, merit you a negative online review. Close It!™ helps you better serve foreign clients by accounting for FIRPTA withholding along with every other nuance of real estate law and tax code for each jurisdiction.

4. Appeal to the first-time homebuyer market.

The first-time homebuyer demographic may make up a smaller share of homebuyers now compared to historic levels, but it's only a matter of time before an influx of millennial homebuyers causes it to explode. And the millennials, more than previous generations, are more likely to look to technology to help them gather information about the process. Be their guide. Keep up with real estate technology, including mobile apps, and share your favorite findings with your millennial homebuyers. Close It!™ is one app homebuyers in the DC metro region in particular will appreciate, but there are many more apps, tools and resources to discover. 

5. Appeal to the move-up buyer market with seller's calculator. 

For buyers in the move-up market, how much house they can afford often depends on how much money they can net from their existing home sale. Introduce those clients to the app that toggles between a net proceeds calculator for the seller side and a cash-to-close calculator for the buyer side. 

Close It!™ is a free iOS and Web app that helps real estate agents, buyers and sellers drill down the costs of buying and selling real estate.

  • Ways to save at closing

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  • What's title insurance?

    Insure your legal ownership just like you'd insure the building, but for lots cheaper.

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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.