Buying or selling in Logan Circle and trying to decode closing costs? Two line items in DC cause the most head scratching: transfer tax and recordation tax. Once you understand what they are, who usually pays, and how to estimate them, your budget gets a lot clearer. This guide keeps it simple and DC specific so you can plan your cash to close or seller net with confidence. Let’s dive in.
DC transfer and recordation taxes
Deed transfer tax explained
The transfer tax is a District of Columbia tax on the conveyance of real property. It is calculated on the total consideration for the sale, usually the contract sales price. In a standard sale, it is applied to the price shown on the deed and is collected at settlement.
Recordation tax explained
The recordation tax is charged when a real estate instrument is recorded in DC. In a purchase, that usually means the deed of trust or mortgage. The tax is calculated on the principal amount of the mortgage being recorded. If you are buying with a loan, this tax is part of your buyer closing costs.
When and how they are paid
Both taxes are administered and collected by the DC Office of Tax and Revenue. Your title or settlement company collects the funds and remits them to the District when the deed and mortgage are recorded. You see these taxes itemized on your settlement statement at closing.
Who typically pays in DC
Market norm in Washington, DC
- Transfer tax: the seller customarily pays this tax in DC.
- Recordation tax: the buyer typically pays this tax when there is a mortgage, because it is based on the loan amount.
This is a market convention, not a law. Your contract can allocate these costs differently.
Exceptions and negotiations
- Parties can split one or both taxes, or ask for the other side to cover them as part of concessions.
- Loan program rules and lender requirements can affect who bears the cost.
- Cash buyers who do not record a mortgage generally do not incur the mortgage-based recordation tax, though there will still be standard recording fees for the deed and other documents.
Always confirm who pays which tax in your sales contract and with your title company.
How the taxes are calculated
Simple formulas you can use
- Transfer tax owed = Sales price × Transfer tax rate
- Recordation tax owed = Mortgage amount × Recordation tax rate
If the buyer’s loan is less than the price, the recordation tax is calculated only on the loan amount. In a financed purchase where the seller pays transfer tax and the buyer records a mortgage, the combined DC tax paid at closing equals:
(Sales price × transfer rate) + (Mortgage amount × recordation rate)
Special rate situations
DC can apply different rates or treatment for certain transactions. Examples include transfers involving government entities or qualifying non-profits, gifts between family members, and transactions with corporate or non-individual parties. Rules also differ for foreclosures, refinances, or assumed loans. If any of these apply, have your title company check current rules.
Exemptions and special cases to know
Situations that may be exempt or treated differently
- Certain transfers among family members or to qualifying non-profits and government entities
- Foreclosure or trustee’s sales
- Refinances, which can involve recordation tax on the new mortgage amount, with limited relief in specific scenarios
- Purchases where the buyer is an entity such as a corporation, trust, or LLC
Credits and local buyer assistance
At times, DC or local programs may offer credits or relief for qualifying first-time or income-eligible buyers. Eligibility and benefits vary. If you think you might qualify, ask your lender and settlement agent to review current program guidelines.
Logan Circle example: your budgeting roadmap
To make this tangible, here is a clear, illustrative example using a common Logan Circle price point. Use the formulas to plug in the current tax rates supplied by your title company.
Scenario setup
- Property: Logan Circle condo
- Contract price: 900,000 dollars
- Buyer’s mortgage: 720,000 dollars (80 percent loan-to-value)
- Allocation: Seller pays transfer tax. Buyer pays recordation tax on the mortgage.
Calculate the taxes using formulas
- Transfer tax = 900,000 dollars × (Transfer rate)
- Recordation tax = 720,000 dollars × (Recordation rate)
If you prefer placeholders: if the transfer rate is T percent and the recordation rate is R percent, then:
- Transfer tax = 900,000 × (T/100) = 900,000T/100
- Recordation tax = 720,000 × (R/100) = 720,000R/100
Seller side illustration
Start with the contract price, subtract typical seller costs, and estimate your net.
- Contract price: 900,000 dollars
- Less transfer tax: 900,000 × (Transfer rate)
- Less broker commission: use a formula, for example 900,000 × (Commission percent)
- Less mortgage payoff and any seller credits
- Result: Estimated seller net proceeds
This shows you how the transfer tax fits into your net, separate from commissions, payoffs, or credits.
Buyer side illustration
Buyers focus on cash to close. Add your down payment and closing costs, then subtract any credits.
- Purchase price: 900,000 dollars
- Plus recordation tax: 720,000 × (Recordation rate)
- Plus other closing costs and prepaids
- Minus any lender credits and prorations
- Minus your loan amount if you are calculating total funds to bring
- Result: Estimated cash needed at closing
Other common closing costs to plan for
These costs are separate from the District’s transfer and recordation taxes. Amounts vary by provider, loan, and building.
- Title insurance premiums for owner and lender policies
- Settlement or escrow fee charged by the title company
- Recording fees for the deed and deed of trust
- Lender charges, appraisal, and credit report
- Condo or HOA fees prorated between buyer and seller
- Condo resale package or estoppel letter fee
- Buyer’s homeowner or HO-6 condo insurance
- Seller’s mortgage payoff, any negotiated seller credits, and prorations
Important: Rates and fee schedules change. Always confirm current DC tax rates with the Office of Tax and Revenue or your title company, and ask your settlement agent for a written estimate tailored to your contract and loan.
Quick budgeting checklist
Use this step-by-step list to get accurate numbers early.
- Confirm who pays which tax in your contract. The DC norm is seller pays transfer tax and buyer pays recordation tax when there is a mortgage, but you can negotiate.
- Ask your title company for the current DC transfer and recordation rates and an itemized cost estimate.
- Verify your loan amount with your lender. The recordation tax is calculated on the mortgage principal.
- Add private fees and prepaids separately from taxes. Keep taxes and fees in distinct buckets for clarity.
- If you might qualify for any credits or assistance, have your lender and title company review eligibility early.
- For sellers, model your net using formulas for transfer tax, commission, mortgage payoff, and any credits.
How local guidance helps in Logan Circle
Every building, loan, and contract is a little different. A local team can help you structure your offer or listing to align with DC norms, negotiate tax allocation when it matters, and coordinate with a title company to deliver precise, written numbers before you sign. That clarity keeps your Logan Circle timeline and budget on track.
If you want a customized estimate for your specific address, loan, and contract, connect with Jen Angotti. You will get clear next steps, a tailored estimate from a trusted title partner, and neighborhood-specific advice that supports your goals.
FAQs
Who pays DC transfer and recordation taxes?
- Market norm in DC is that the seller pays the transfer tax and the buyer pays the recordation tax when there is a mortgage, but the contract can allocate these costs differently.
When are DC transfer and recordation taxes collected?
- They are collected by your title or settlement company at closing and remitted to the DC Office of Tax and Revenue when the documents are recorded.
How can I estimate these taxes for my closing?
- Use the formulas Transfer tax = sales price × transfer rate and Recordation tax = mortgage amount × recordation rate, then confirm the current rates and exact figures with your title company.
Are there exemptions or reductions in DC?
- Some family transfers, non-profit or government transactions, foreclosures, and certain refinances can be exempt or treated differently, and some local programs may offer credits for qualifying buyers.
Do entity buyers face different treatment?
- DC rules can apply different rates or surcharges for purchases by corporations, trusts, or LLCs, so have your title company verify current guidance if an entity is involved.
