Before filing a quitclaim deed in Washington, DC, make sure you are prepared for the associated fees and tax implications.
Filing Fees
There are several fees associated with filing a quitclaim deed. They include:
- a $150 deed recording fee.
- a $6.50 surcharge fee.
- a $2.25 per page copy fee (if you intend to make copies at the Recorder of Deeds office).
If you plan to file online, you may need to pay an extra fee for the e-recording vendor.
Taxes
Both grantor and grantee may need to consider the following taxes associated with the property transfer:
1. Transfer Tax
District of Columbia transfer taxes are based on the consideration given for the property or its purchase price. However, if the consideration is nominal or there is no consideration given, transfer taxes will consider the fair market value of the property.
For residential properties under $400,000, the transfer tax is 1.1% of the consideration or fair market value of the property. For properties with a consideration or fair market value of more than $400,000, it is $1.45%. Transfer taxes are usually paid by the seller (or grantor).
D.C. Code § 42–1102 outlines several circumstances under which property transfers may be exempt from the transfer tax. These include:
- Deeds to property acquired by the government, including both the US government and the District of Columbia government.
- Supplemental deeds.
- Deed transfers between spouses, parent and child, grandparent and grandchild, or domestic partners.
- Tax deeds.
- Releasing property held as security for a debt.
- Property transfers to qualifying lower-income homeownership households, as laid out in D.C. Code § 47-3503(a).
- Transfers to or from a legal trust.
2. U.S. Gift Tax (Form 709)
The United States gift tax is assigned to high-value gifts, including gifts from family members.
The value of real estate often means that it is high enough to count toward a gift tax, which means that property owners and recipients should take that into account when making a property transfer. The state does not assign its own gift tax.
3. Capital Gains Tax
The capital gains tax is assessed on the increased value of property when it is sold compared to when it was purchased. Real estate values can go up considerably over time, which means that property owners may face a capital gains tax when they sell.
There are exemptions to the capital gains tax when the property owner has used that property as their primary residence for at least two of the last five years. The state does not distinguish between ordinary income and capital gains, so the property owner may face increased state taxes after a property sale.
