How to qualify for the DC Tax Abatement program

DC Tax Abatement

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 specprog@dc.gov. 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. 

Maximum VA Loan county limits updated for 2016

Maximum VA Loan county limits updated for 2016

The Department of Veterans Affairs Loan Guaranty Program recently published county “limits” to be used for VA Loans effective January 1, 2016.

Please note, these limits do not reflect a maximum amount that an eligible veteran is permitted to borrow, but rather, reflects the VA’s maximum guaranty amount for a particular county. The maximum VA guaranty amount for loans over $144,000 is 25% of the 2016 VA limit.

For example, an eligible veteran may borrow up to $625,500 to purchase a property in Washington, DC (2016 VA limit), with the VA guaranteeing 25% of the loan amount, or approximately $156,375.00. These amounts have remained unchanged in most of the DC Metro Region compared to the 2015 VA limits.

The limits listed below are for some counties in Maryland and Virginia, as well as for the District of Columbia. For a complete list of the county limits for 2016, please click the chart of conforming loan limits. If your county is not listed on the county limits chart on the VA website, the 2016 limit is $417,000.

State
County
2016 VA Limit
DC
District of Columbia
$625,500
MD
Anne Arundel
$517,500
MD
Frederick
$625,500
MD
Howard
$517,500
MD
Montgomery
$625,500
MD
Prince George's
$625,500
MD
Alexandria
$625,500
VA
Arlington
$625,500
VA
Fairfax
$625,500
VA
Falls Church
$625,500
VA
Fauquier
$625,500
VA
Loudoun
$625,500
VA
Manassas
$625,500
VA
Prince William
$625,500

Maximum VA loan county limits updated for 2015

The Department of Veterans Affairs Loan Guaranty Program recently published county "limits" to be used for VA Loans effective January 1, 2015.

Please note, these limits do not reflect a maximum amount that an eligible veteran is permitted to borrow, but rather, reflects the VA’s maximum guaranty amount for a particular county.

The maximum VA guaranty amount for loans over $144,000 is twenty-five (25%) percent of the 2015 VA limit. For example, an eligible veteran may borrow up to $625,500 to purchase a property in Washington, DC (2015 VA limit), with the VA guaranteeing twenty-five percent (25%) of the loan amount, or approximately $156,375.00. These amounts have decreased dramatically in most area of the DC Metro Area compared to the 2014 VA limits.

The limits listed below are for some counties in Maryland and Virginia, as well as for the District of Columbia. To get a complete list of the county limits for 2015, please click here. [Please note, if your county is not listed on the county limits chart on the VA website, the 2014 limit is $417,000.]

State County 2015 VA Limit
DC District of Columbia $625,500
MD Anne Arundel $517,500
MD Frederick $625,500
MD Howard $517,500
MD Montgomery $625,500
MD Prince George's $625,500
VA Alexandria $625,500
VA Arlington $625,500
VA Fairfax $625,500
VA Falls Church $625,500
VA Fauquier $625,500
VA Loudoun $625,500
VA Manassas $625,500
VA Prince William $625,500

Benefits of a VA loan in today's real estate market

With interest rates remaining steady at all-time lows and a housing market that has seen below-market prices in most areas, now is a great time for servicemembers to purchase a home or refinance their existing home and take advantage of the benefits of a VA loan.

So, what are the benefits of a VA loan?

  1. It is available for active-duty servicemembers, veterans and some surviving spouses
  2. It can be used to purchase an existing home, build a new home or refinance an existing mortgage
  3. For the purchase of a new home, a down payment is not required – it is possible to finance 100% of the purchase price
  4. For the refinance of an existing VA mortgage, borrowers can refinance to a lower interest rate VA loan (VA to VA loan) without having to re-qualify by taking advantage of the VA Streamline Refinance Loan Program (IRRRL)
  5. If the borrower/purchaser can provide proof from the VA of a service-related disability, the VA funding fee may be waived by the lender
  6. There is no form of mortgage insurance premiums that are paid during the course of the loan, unlike FHA loans or some conventional mortgages
  7. While conventional mortgages guarantee the best interest rates for borrowers with a credit score of 720 or higher, a VA loan will not be denied to a borrower nor will a higher interest rate be charged based solely on a low credit score
Now is the time to take advantage of this government-backed loan program and low interests rates to buy the home of your dreams!

Maximum VA loan county limits for 2013 released

The Department of Veterans Affairs Loan Guaranty Program recently published county “limits” to be used for VA Loans effective January 1, 2013.  

Please note, these limits do not reflect a maximum amount that an eligible veteran is permitted to borrow, but rather, reflects the VA’s maximum guaranty amount for a particular county.  The maximum VA guaranty amount for loans over $144,000 is twenty-five (25%) percent of the 2013 VA limit.  For example, an eligible veteran may borrow up to $843,750 to purchase a property in Washington, DC (2013 VA limit), with the VA guaranteeing twenty-five percent (25%) of the loan amount, or approximately $210,937.50.  These amounts have increased dramatically in most area of the DC Metro Area compared to the 2012 VA limits.

The limits listed below are for some counties in Maryland and Virginia, as well as for the District of Columbia.  To get a complete list of the county limits for 2013, please click here.  [Please note, if your county is not listed on the county limits chart on the VA website, the 2013 limit is $417,000.]

State County 2012 VA Limit
DC District of Columbia $843,750
MD Anne Arundel $500,000
MD Frederick $843,750
MD Howard $500,000
MD Montgomery $843,750
MD Prince George's $843,750
VA Alexandria $843,750
VA Arlington $843,750
VA Fairfax $843,750
VA Falls Church $843,750
VA Fauquier $843,750
VA Loudoun $843,750
VA Manasas $843,750
VA Prince William $843,750
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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.