Buying a $1 million home in DC? One closing cost alone is $14,500.And it catches a lot of buyers by surprise.It’s the buyer’s share of DC’s transfer and recordation taxes.So what exactly are these taxes?When real estate changes hands in Washington, DC, the District imposes two separate taxes on the transaction: a deed recordation tax and a deed transfer tax.For residential sales of $400,000 or more, each tax is 1.45% of the purchase price.In a typical DC residential transaction, the cost is effectively split between the parties:Buyer → 1.45%Seller → 1.45%So on a $1,000,000 home:Buyer: $1,000,000 × 1.45% = $14,500Seller: $1,000,000 × 1.45% = $14,500Combined, that’s $29,000 in DC transfer and recordation taxes on a $1 million sale.One thing that can make this confusing is the terminology.DC technically distinguishes between the deed recordation tax and the deed transfer tax, but on a buyer’s Closing Disclosure you may simply see the buyer’s $14,500 portion listed as “Transfer Taxes.”Either way, the important number for a $1 million DC homebuyer is:$14,500.And that’s before title insurance, lender fees, appraisal, settlement fees and other closing costs.This is one reason I don’t like telling buyers to simply assume that “closing costs are X% of the purchase price.”Real estate closing costs are local. Very local.If your target price is around $1 million in DC, start your budget knowing that approximately $14,500 is already spoken for just for the buyer’s share of DC’s transfer/recordation taxes.The mortgage payment is only one part of planning for a home purchase.Knowing the cash needed at closing before you start making offers can be just as important.If I am pushed for a percentage, I usually say that all closing costs to purchase a home in Washington DC paid to all parties would be around 3% of the sales price. But that could be off by a large sum. It is best to get pre-approved with a mortgage lender and get a more exact Loan Estimate tailored to your situation.✅ Let’s connect and I can get you a more exact estimate of closing costs for your Washington DC home purchase.📞 Schedule a Call with Brian Martucci🌐 Visit www.getloans.com to start your mortgage pre-approval today.
