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Archive for July 17th, 2007

Transfer tax rates

Tuesday, July 17th, 2007

The information below is courtesy of Federal Title. You can find the complete page here.

Transfer Rates/Recordation Taxes for DC, VA & MD

DC
Purchase Transactions

  • DC Recordation is calculated using the purchase price.Transactions $399,999 and under are taxed at the rate of 1.1% of the purchase price. Example: $300,000 x 1.1% = $3,300. So the buyer and seller would each pay $3,300 for a total of $6,600 paid to DC.Transactions $400,000 and above are taxed at the rate of 1.45% of the purchase price. Example: $500,000 x 1.45% = $7,250. So the buyer and seller would each pay $7,250 for a total of $14,500 paid to DC.

    Please Note: For transactions on or after October 1, 2006, DC Transfer/Recordation Tax will increase to 1.45% for transactions in the amount of $400K and above. All residential transactions under $400K will remain at 1.1%. All commercial transactions will be 1.45%.

    See information about the DC Tax Abatement Program here: DC Tax Abatement Program

Refinance Transactions

  • Residential Properties are exempt; DC does not tax a Deed of Trust so long as the property is Class I or Class II (i.e., residential).

Recording Fees

  • $26.50 for the first two pages and $7 for each page thereafter. This generally results in a total recording cost of approximately $290 on purchases and approximately $215 on refinances.

Property Taxes
Taxes are paid semi-annually, the two tax periods are:

  • Taxes due on 3/15 for the period of 10/1 - 3/31.
  • Taxes due on 9/15 for the period of 4/1 - 9/30.

VA

Purchase Transactions - All Counties

  • Deed Tax = $3.33 per $1000 of Purchase Price.
  • Trust Tax = $3.33 per $1000 of loan amount.

Refinance Transactions - All Counties

  • Trust Tax = $3.33 per $1000 of loan amount.

If payoff lender is same as new originating lender, borrower pays $2 per $1000 only on the difference of increase of loan amount.

Recording Fees
$33.00 to record a deed and $66.00 to record a mortgage, regardless of the number of pages in the documents. This generally results in a total recording charge of approximately $99 for both purchases and refinances.

Property Taxes
Taxes are paid semi-annually, due dates vary by county. A few counties are outlined below:

  • Fairfax County,
    • First Half due 7/28
    • Second Half due 12/5
    • 703-222-8234
  • Arlington
    • First Half due 6/5
    • Second Half due 10/5
    • 703-228-3090
  • City of Alexandria
    • First Half due 6/15
    • Second Half due 11/15
    • 703-838-4777
  • Prince William
    • First Half due 7/28
    • Second Half due 12/5
    • 703-792-6710

MD

Purchase Transactions

  • State Transfer Tax is 0.25% to purchasers for all counties. Note:If first-time Maryland Homebuyer and will occupy property as principal residence, then borrower is exempt from this tax. However, all purchasers must be first-time Homebuyers in Maryland in order to qualify.
  • State Recordation Tax (see chart below).
  • County Transfer Tax (see chart below).

Refinance Transactions

  • State Recordation Tax (see chart below) based on loan amount*.
  • On principal residence transactions, the borrower pays State Recordation Tax only on the difference between the new loan amount and the existing principal balance.
  • If the property is not a principal residence, please contact Federal Title & Escrow Company for calculating transfer and recordation taxes.

Recording Fees for Residential Properties

  • $40 for each Deed or Deed of Trust.
  • $40 per release.

This generally results in a total recording charge of approximately $90 for purchases and approximately $80 for refinances.
County Recordation
Tax*		 County
T-fer Tax**		 Property Tax Rate*** Code
Allegheny $3.00 0.25% $1.132 1
Baltimore County^ $2.50 0.75% $1.247 2
Calvert $5.00 None $1.024 --
Carroll $5.00 None $1.180 8
Charles $5.00 None $1.148 --
Frederick $6.00 None $1.132 --
Harford $3.30 0.50% $1.224 1-8
Kent $3.30 0.25% $1.144 --
Prince George's $2.20 0.70% $1.092 --
St. Mary's $4.00 0.50% $1.040 1
Talbot $3.30 0.50% $0.685 5
Wicomico $3.50 None $1.173 5
Note:The above Transfer & Recordation Taxes are based on customary splits(apportionment) between buyer and seller, the split is typically 50-50. In some cases, the parties may reallocate the responsibility to pay Transfer & Recordation Taxes. We advise that you carefully review the sales contract prior to calculating the Transfer & Recordation Taxes. If you have any questions, please contact us at services@federaltitle.com.
* Per $1,000 of purchase price (based on loan amount for refinancing transactions)
** Percent of purchase price
*** Per $100 of value (includes state real property tax of ...084/$100). ^Please note that we do not offer services in this area.Note: Tax rate may vary in cities of other incorporated areas.

  1. The first $30,000 is exempt for owner occupied principal residence.
  2. The first $22,000 is exempt for owner occupied principal residence.
  3. The first $25,000 is exempt for owner occupied principal residence OR the first $75,000 is exempt for owner occupied principal residence AND first-time Maryland Homebuyers.
  4. Surcharge of $10 per Deed/Deed of Trust.
  5. The first $50,000 is exempt from Recordation Tax for owner-occupied principal residence.
  6. Exempt for first time Maryland Homebuyer.
  7. Washington County has a 2% Agriculture Tax, if applicable.
  8. These counties require a lien certificate, fee ranging $25 - $55.

Property Taxes
Principal residences are paid semi-annually, investment properties are paid annually.

  • Taxes due on 9/30 for the period of 7/1 - 12/31.
  • Taxes due on 12/31 for the period of 1/1 - 6/30.

Updated on 9/6/2006 - This information is deemed reliable, but not guaranteed.

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DC Tenant Rights - an introduction

Tuesday, July 17th, 2007

Tenant rights in DC is a very complex topic & beyond the scope of this FAQ. However, we'll delve into it at a high level to give you an idea of what you need to be aware of.

If you're buying or selling a property in Washington, DC that has a tenant, you need to know that:

  1. The tenant has the right to purchase the property at the same terms of the contract you have ratified. The ratified contract must be presented to the tenant within 2 days of ratification. The tenant has 15 days to decide whether or not they want to purchase the property, unless they waive that right with a form similar to this one: DROdio - Tenant affadavit provided by National Title
  2. If you are buying or selling a multi-unit property, or planning a condo conversion, the law gets much more complex very quickly. If you want to convert an apartment building into a condo project, for example, we suggest you contact George Nwanze at Goal, LLC to help you through the process. You can find a sample document illustrating the process here: DROdio - Condo conversion process . You can also contact his assistant, Sandi Fall, at mail@goalre.com.

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How does the Homestead Deduction work?

Tuesday, July 17th, 2007

Here is information on Maryland's homestead deduction:

http://www.dat.state.md.us/sdatweb/Homestead_app.htm

Virginia's homestead deduction has a limit of $5,000 in value. You can see what this site wrote about it:

For Virginia, the homestead exemption is limited to $5,000 in value. The exemption does not apply against taxes and debts for purchase or improvement of the homestead. If a husband and wife own a homestead, the law usually requires that both of them sign a conveyance or mortgage regarding the real estate for it to be applicable or enforceable against both spouses. For Virginia, a designation or plat of a homestead may be filed. Virginia Code ยง34-4 onward.

The "Homestead Deduction" allows you to reduce the assessed value of a property by $60,000 if it's your primary residence. Taking this deduction lowers your taxes, because the taxes are calculated on the assessed value. You can find out more information on the Washington DC homestead deduction here.

Here is an email trail between our company and the title company in reference to the homestead deduction in DC:

We wrote:

----- Original Message -----
From: Daniel R. Odio - 202.250.3846
To: Traci Hajducsek
Sent: 7/17/2007 9:29:25 AM
Subject: Re: Homestead Deduction

Hi Traci,

Jack would like to know if it's possible to claim the homestead deduction at closing, to reduce the initial taxes due. Could you please "reply to all" with clarification on this? You can see his email below.

Jack, my guess is that it won't help to claim it at closing, because the taxes you're being charged at closing are transfer taxes, not property taxes. You won't get your first property tax bill until later; they're sent out twice a year.

Thanks,

DROdio

Traci responded:

From: Traci S. Hajducsek [mailto:traci@nationaltitlecorporation.com]
Sent: 17 July 2007 14:55
To: Daniel R. Odio - 202.250.3846; R
Subject: Re: Homestead Deduction

Jack & Daniel,

Most likely, DC will not reassess this property until Sept. or October, so your tax increase will not show up until the bill you get in late February or March of 2008 which will cover the tax period of 10/1/07 - 3/31/08. I always have our buyers fill out the Homestead Deduction at closing and I will file it with DC for you. However, the figure I provided you includes the Homestead Deduction.

The taxes at closing will show the seller paying for the 2nd half of taxes for the tax period of 4/1/07 - 10/1/07 and you will credit the seller for the period of the settlement date through 10/1/07 at the current rate of the cheaper value.

I hope this helps to clarify things. Please feel free to call or e-mail if you have any further questions.

Traci S. Hajducsek
National Title Corporation
1516 P Street NW
Washington, DC 20005
202-466-6206 Phone
202-466-8924 Fax
TRACI@NATIONALTITLECORPORATION.COM
WWW.NATIONALTITLECORPORATION.COM

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How can I find out how much a property is worth?

Tuesday, July 17th, 2007

There are several ways to find out how much a property is worth.

The "in-depth" way to do it is to do an analisys of comparable sales. We have a special, proprietary spreadsheet model that allows us to evaluate the last 100+ sales in an area based on the price per square foot (PSF), tax assessment ratio, and other factors. Here's a screenshot:

DROdio - Analysis Spreadsheet

A quick way is to look for recent sales in the neighborhood. The Washington Post has a great site for this, available here.

Many of our customers ask how good sites like Zillow.com are. Our answer is, "they're good, some of the time." Our experience (and backed up by a recent WSJ article) is that the estimates can be very accurate, or off by more than 25%, and it's hard to tell when they're wrong. We think Zillow is great to get the feel of a neighborhood, but very dangerous to use when deciding how much to offer or sell for on any one specific property.

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