TOPA: New law is finally here!

TOPA: New law is finally here!

The new TOPA statute for a single-family home, condominium unit and single-family home with an appurtenant unit is finally in place.

Notices are up on DC Department of Housing and Community Development’s website.

Our underwriters have not come out with their definitive stance on what will now close the loop for TOPA, but we know this – if the property was listed prior to the enactment of the law on July 3, 2018; all of the old rules of TOPA apply.

This means the old notices must be given via certified mail and the formal process must be followed.

If the property was listed on or after July 3, 2018; new rules apply.

At the moment, the underwriters are asking that the new Notices be given as prescribed by the statute and then, to close the loop, tenants are asked to sign a TOPA affidavit.

The GCAAR form 1316 seems to be acceptable, but check in with the title company. All underwriters are different. The concern still being an affirmative step be taken to clarify the tenant is not going to act and is not a risk for title insurance purposes.

We’ll continue to share TOPA updates as they come in.

5 Things to Know About DC Tax Abatement

As a homebuyer, it is important to be aware of programs you can benefit from in order to reduce the overall cost of the process of buying a place to live.

The DC Tax Abatement program is one such opportunity that a homebuyer can and should take advantage of.

However, there are qualifications that a homebuyer must meet in order to become eligible for this program, and it is important to stay informed on what these are.

Recordation and Real Property Taxes

If it turns out that you are a homebuyer that qualifies for the DC Tax Abatement program, it is important to understand what exactly you are exempt from.

First, you are exempt from a recordation tax at settlement. This means that while someone else who does not qualify for DC Tax Abatement would have to pay a tax to transfer the title of real property from one person to another, you wouldn’t have to. And 1.1% of the purchase price is credited to you from the seller.

Secondly, you don’t have to pay a real property tax for the first five years you live in your home.

This period of five years starts once the next full tax year has begun after filing.

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Financial qualifications

Now that you know what the DC Tax Abatement program exempts you from, you need to know if you are eligible for it.

As for qualifications you must meet financially, there are income limits that you cannot breach and the property you are trying to purchase must cost a certain amount or less.

These amounts can change and fluctuate, however, as of 2018, if you want to be eligible for this program the purchasing price of your property must be $456,000 or less.

As for income limits, these can also change, but currently if only one person is living on the property, then they must make $63,060 or less if they want to qualify for DC Tax Abatement.

Other qualifications to meet

Next, in order to determine your eligibility for DC Tax Abatement, you must look at a couple more factors that are not money related.

First, the property that you are purchasing must be your principal residence. Your principal residence can be determined by where you pay your taxes, where you vote, what address is on you driver’s license, etc.

In addition to the property being your principal residence, you must also be domiciled in DC. This means that you must have a DC government issued ID, you are registered to vote in DC, and you file DC Personal Income taxes.

If all of these qualifications have been met, then you can begin to gather the documentation that your settlement agent will file.

Reporting changes in situation

One thing that is important to note is what to do if any of the information that granted you eligibility has changed after you qualified for DC Tax Abatement.

If your income has increased so that it exceeds the thresholds for the tax abatement program or if the property you purchased is no longer your principal property, then you must self-report these changes within 30 days after they happen.

This means that as a homeowner with DC Tax Abatement, it is your responsibility to stay up to date with the latest annual thresholds to qualify for DC Tax Abatement.

Applying for DC Tax Abatement after settlement

With so much going on in the homebuying process, it could be easy to let certain things, like DC Tax Abatement, slip.

However, if you did not apply for DC Tax Abatement before settlement, all is not lost. It is still possible to apply for DC Tax Abatement for up to three years after settlement.

Of course, all of the previously mentioned qualifications must still be met for you to be eligible.

The numbers in this article may be out of date. Visit our guide how to qualify for DC Tax Abatement for the most current information.

Close It! House of the Week: Cozy condo in the heart of Columbia Heights

Close It! House of the Week: Cozy condo in the heart of Columbia Heights

This week, we’re headed over to Columbia Heights to this cozy 654 square foot, 2-bedroom condo. This garden-style suite is conveniently located near the Metro which makes the commute easier. This lovely property is listed for $499,000.

This beautiful condo features a modern kitchen with granite countertops and luxurious stainless-steel appliances. Brazilian hardwood floors lead the way to the two marble bathrooms. In addition, this property features a private balcony for owners to enjoy. What makes this property so appealing is its fully equipped fitness room that is perfect for anyone who likes to stay active. Something else that makes this property so special is its central location near plenty of restaurants and shops for the owners to explore.

Assuming a homebuyer puts down 20 percent on a conventional loan, their cash to close number will be approximately $114,825.64. Monthly payments will then be around $2,224.50 per month (this does not include HOA fees). 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.

Workshop today on recent changes to DC’s TOPA law

Workshop today on recent changes to DC’s TOPA law

Did you know TOPA was amended as of July 3?

The DC Department of Housing and Community Development will hold a workshop to provide an overview of the newly enacted Single-Family Home Exemption Amendment Act of 2018 (Bill 22-0315, Act 22-339). today from 1 to 3 pm.

For those who cannot attend in person, the DHCD Facebook page will also broadcast the workshop live.

The workshop will cover a variety of topics including:

  • Types of single family properties that are exempt
  • Criteria that an elderly or disabled tenant must meet to still have a limited opportunity to purchase
  • Notice and documentation requirements

If you wish to attend today's workshop in person, you must register. The workshop is free and will take place from 1 to 3 p.m. at One Judiciary Square, located at 441 4th Street NW, Old Council Chamber Room, Washington, DC 20002.

5 Things to Know About DC Homestead Deduction

5 Things to Know About DC Homestead Deduction

In the process of purchasing a property, it is hard to keep track of all of the elements involved.

Such elements can even include things that could be beneficial to the homebuyer. Therefore, we here at Federal Title do our best to keep homebuyers informed about their options in the homebuying process, like the DC Homestead Deduction, so that they can make the best decisions.

What is there to gain?

The DC Homestead Deduction provides valuable savings when it comes to what amount of the assessed value for your property is taxable.

Currently, the property tax rate is $0.85 per $100 in DC which means that .0085 of your property’s assessed value must be paid as a tax. However, if you are eligible for the DC Homestead Deduction, your property’s assessed value is reduced by $73,350.

Therefore, because the amount the government can tax is less, the money you must pay for the real property tax is less. However, the value by which your property is reduced changes annually and so it is important to stay up to date on that number.

Qualifications

In order to be eligible for the DC Homestead Deduction, there are four qualifications a homebuyer must meet.

First, a Homestead Deduction application must be filled out and on file with the Office of Tax and Revenue (link for DC Homestead Deduction application: https://otr.cfo.dc.gov/node/1299251).

In addition, the property, which cannot include more than five dwelling units, must be the principal residence of the owner/applicant.

Principal residency can be determined by where you pay your taxes, where you vote, what address is on you driver’s license, etc.

Finally, you must be domiciled in DC which means that you have a DC government issued ID, you are registered to vote in DC, and you file DC Personal Income taxes.

If these conditions are met, then you are eligible for the DC Homestead Deduction.

When do you begin receiving the benefits of the DC Homestead Deduction?

When the DC Homestead Deduction goes into effect depends on when the application for it was filed. If an approved application was filed between October 1 and March 31, then the DC Homestead Deduction will go into effect for that entire tax year and every tax year after that.

If an approved application was filed between April 1 and September 30, then the property will receive half of the deduction amount and then the following years after that it will receive the full deduction.

When should you cancel your DC Homestead Deduction?

There are several instances in which you must cancel your DC Homestead Deduction.

It is important that you can recognize the situations so that you don’t fall victim to the District of Columbia’s Homestead Deduction Audit Program.

Essentially, if the property is no longer your principal residence then you must fill out a Cancellation of Homestead Benefit form.

This means that if you moved off the property and are renting it out you must fill out the form. If you purchased another property in DC and filed for a Homestead Deduction on the property then you must fill out the form.

Are you still eligible if you are only a co-owner of a property?

If you are only a co-owner of a property and the other owners will not be living with said property as their principal residence then you are still eligible for the DC Homestead Deduction.

All that is required is that you meet the three qualifications which are that you are a principal resident, your property only includes five or fewer dwelling units, and you are domiciled in DC.

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