DC Transfer and Recordation Tax: Rates, First-Time Buyer Relief, Who Pays

The DC transfer and recordation tax is actually two separate charges that work in parallel. On a typical residential sale, the seller owes a transfer tax and the buyer owes a recordation tax at the same rate: 1.1% each if the price is under $400,000, or 1.45% each at $400,000 or more. That puts the combined tax at 2.2% to 2.9% of the purchase price, collected once at closing and completely separate from annual property taxes.

Why There Are Two Taxes

The transfer tax, under D.C. Code § 47-903, falls on the person transferring the property.¹ The recordation tax, under D.C. Code § 42-1103, falls on the deed itself and is owed by the buyer.² They run at identical rates and get paid at the same moment, so most people lump them together as “DC transfer taxes.” The distinction still matters, because each tax has its own exemption list in a different section of the code, and claiming an exemption from one does not automatically clear the other.

What You’ll Owe at Closing

Both taxes begin at 1.1% of the consideration paid. When the price reaches $400,000, an extra 0.35% kicks in and applies to the entire amount, not just the portion above the threshold. That brings each tax to 1.45%.¹

The combined bill looks like this:

Residential sale under $400,000: 2.2% total (1.1% + 1.1%).
Residential sale at $400,000 or more: 2.9% total (1.45% + 1.45%).

A $500,000 home produces $7,250 in transfer tax and $7,250 in recordation tax, for $14,500 combined. A $350,000 home produces $7,700 combined.

Consideration is not just the cash price. Assumed mortgage debt, liens the buyer takes on, and the value of any property exchanged all count toward the taxable amount. If there is no consideration, or if it is nominal, the tax runs on the property’s fair market value as determined by the Mayor.¹ The FP-7/C instructions treat “nominal” as less than 30% of fair market value, in which case the latest assessed value is reported instead.³

Who Pays by Law and Who Pays by Contract

By statute, the seller owes the transfer tax and the buyer owes the recordation tax. In most DC real estate contracts, though, the parties agree to split the combined total 50/50. That is a private arrangement between buyer and seller, not a rewrite of the law. The Recorder of Deeds will not process the deed until the full amount comes in, regardless of which side the contract pinned it on.

Title companies and settlement attorneys usually pull the correct amounts from each party’s funds at closing. When you are negotiating, look at whether the contract allocates taxes 50/50 or sticks each side with the statutory share. On a $600,000 sale, the difference between the two approaches shifts roughly $4,350 from one party to the other.

Common Exemptions

Transfer tax exemptions sit in D.C. Code § 47-902; recordation tax exemptions sit in § 42-1102. The lists overlap heavily, and the exemptions people use most often include:

Transfers between spouses, domestic partners, parent and child, or grandparent and grandchild, when no actual consideration changes hands, are exempt from both taxes.⁴⁵
Moving bare legal title into a revocable trust where the transferor remains the current beneficiary is exempt, as are transfers to named beneficiaries after the grantor’s death.⁴
Transfers made under a divorce decree or a written separation agreement are exempt from the transfer tax.⁴
Transfers by or to the U.S. government, the DC government, or organizations holding a valid DC real property tax exemption are generally exempt from both charges.⁵
Households meeting the requirements of D.C. Code § 47-3502 can receive a full exemption from both taxes, provided the buyer receives a credit against the purchase price equal to the tax that would have been due.⁶
A deed of trust recorded simultaneously with the deed conveying the property is exempt from the recordation tax, which keeps a purchase-money mortgage from being taxed twice at the same closing.⁵

To claim any of these, you have to cite the specific DC Code provision on the FP-7/C and attach supporting documentation. A checked box is not enough.

Reduced Recordation Rate for First-Time Homebuyers

Separate from the full exemptions, DC offers a reduced recordation tax rate of 0.725% for first-time homebuyers who meet income and purchase-price limits. For fiscal year 2026 (effective October 1, 2025), the maximum purchase price is $777,000, and household income caps range from $206,640 for one person up to $342,360 for a household of six. Eligibility is based on adjusted gross income from the most recent federal return. The reduction applies only to the recordation tax, so the seller still owes the full transfer tax on the same deal.⁷

The limits and cap are reset each fiscal year. Check the current OTR publication before assuming you qualify.

Selling an Entity That Holds DC Real Estate

Selling the building itself is not the only trigger. When someone acquires a controlling interest in an entity that holds DC real property, the District treats it as a taxable transfer of an economic interest, even though no deed is recorded. The rule exists so buyers and sellers cannot sidestep the tax by holding real estate in an LLC and selling membership interests instead.

An entity qualifies for this treatment if, during the 12 months before the transfer, it either derived more than 50% of its gross receipts from DC real property or held DC real property worth 80% or more of its total tangible assets.⁸ A controlling interest can be built up over multiple transactions within a 12-month window, including through parent or subsidiary ownership.

The recordation tax rate on these transfers is 2.9% of the consideration allocable to the DC real property, roughly double the standard rate.² The standard transfer tax under § 47-903 still applies to the transferor. Anyone involved in an entity-level transaction with DC real property should budget for the higher rate and work the aggregation rules through with a tax professional.

Filing the Return and Paying

Every deed submitted for recording has to come in with a completed Form FP-7/C, the Real Property Recordation and Transfer Tax Return, available from the DC Office of Tax and Revenue. The form asks for the property’s Square, Suffix, and Lot numbers, which you can look up through the real property assessment database at mytax.dc.gov.³ Both buyer and seller sign under penalty of perjury that the reported price is accurate.

Documents can be submitted to the Recorder of Deeds electronically, in person, or by mail. In-person payments go by cash, check, money order, or Visa/MasterCard; mailed payments must be check or money order payable to DC Treasurer.⁹ Payment is due at recording. The deed does not get stamped into the public record until the tax is paid in full, and until that happens the new owner has no officially recognized title.

Penalties and Interest if You Underpay

Interest on any underpayment accrues at 10% per year, compounded daily, from the date the liability arose until the date you pay.¹⁰ On top of interest, the District layers escalating penalties:

Failure to file or pay on time: 5% of the tax due for the first month, plus 5% for each additional month, capped at 25%.¹¹
Negligence or substantial understatement: 20% of the underpayment. A gross valuation misstatement doubles that to 40%.
Fraud: 75% of the underpayment attributable to the fraud.

The penalties stack with the 10% interest, so an understated figure gets expensive quickly. If a deal involves non-cash components, assumed debt, or a property exchange, lock the valuation down before closing. Fixing it afterward costs far more than getting it right the first time.

1
D.C. Law Library. D.C. Code 47-903 – Imposition of Tax; Rate; Returns; Liability for Tax
2
D.C. Law Library. D.C. Code 42-1103 – Imposition of Tax; Rate; Return; Contents; Liability for Tax
3
Office of the Chief Financial Officer – Office of Tax and Revenue. Real Property Recordation and Transfer Tax Form FP-7/C General Instructions
4
D.C. Law Library. D.C. Code 47-902 – Enumeration of Transfers Exempt From Tax
5
D.C. Law Library. D.C. Code 42-1102 – Deeds Exempt From Tax
6
D.C. Law Library. D.C. Code 47-3503 – Exemptions for Qualifying Lower Income Homeownership Households
7
DC Office of Tax and Revenue. ROD 11 – Reduced Recordation Tax Rate for First-Time Homebuyers FY2026
8
D.C. Law Library. D.C. Code 42-1102.02 – Transfer of Economic Interest Defined
9
DC Office of Tax and Revenue. ROD FAQs
10
FindLaw. D.C. Code 47-4201 – Interest on Underpayments
11
D.C. Law Library. D.C. Code Chapter 42, Subchapter II – Penalties