2

May

Do Not Write the Contract for $400,000!

Cullen P. Watson, Esq.

Do Not Write the Contract for $400,000!

         Write it for one penny less. It will save you money in the District of Columbia, and possibly some other areas as well. Please allow me to explain. Occasionally, I will receive an offer for a property where the amount offered in the contract is $400,000. While there is nothing wrong with this number per se, it can be a costly mistake for both the buyer and seller. How? For better or worse, the DC Recorder of Deeds taxes transactions at or over $400,000 at the rate of 1.45% for both the Transfer and Recordation tax. For any transactions under $400,000, the taxation rate falls to 1.1%. The general custom is for the buyer to pay the Recordation and the seller to pay the Transfer Tax.

Here is the breakdown of the math.

$400,000.00 at 1.45% = $5,800.00

$399,999.99 at 1.1% = $4,399.99

Total Savings = $1,400.01

        I see this mistake happen more than I should, and it costs the seller and buyer over $1,400 combined. Please note that these rates only apply for the District of Columbia. Different states and counties have different rates and different thresholds. So if you are thinking of buying or selling, sweat the details! At Lawyers Realty Group, we do! Buy Smart. Live Well.

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