Are DC transfer taxes on your radar as you set your price or craft an offer? In Washington, DC, transfer and recordation taxes can shift thousands of dollars between buyer and seller, and they show up directly on the closing statement. If you want to protect your net as a seller or plan your cash to close as a buyer, you need a clear strategy. In this guide, you’ll learn how these taxes typically flow in DC deals, how they affect pricing and negotiation, and simple models you can use to plan with confidence. Let’s dive in.
DC transfer taxes, in plain English
DC real estate closings include two buckets of costs tied to the deed and the loan. Transfer tax is tied to the transfer of the property itself and is paid to record the deed. Recordation tax and recording fees are paid to record documents in the land records, such as a new mortgage.
The District sets the statutes, rates, and any exemptions, and local title companies apply them at closing. Exact rates and eligibility for exemptions can change, and the settlement agent is the authority for final numbers. Always confirm current rules and line-item amounts with your title or closing officer.
Who pays in Washington, DC
Allocation is negotiated. In DC, it is common to negotiate who pays the deed transfer tax and who pays recordation charges, and that decision is reflected in the contract and settlement statement. Market conditions, lender requirements, and the parties’ goals all influence who actually pays at closing.
If a buyer uses a mortgage, the lender typically requires that any recordation taxes tied to the new loan be paid at or before closing. Sellers sometimes offer credits that cover part of the buyer’s closing costs, which can include buyer-paid recording charges. Certain transfers may qualify for exemptions, but these must be validated by the title company before closing.
Why taxes shape pricing strategy
Transfer and recordation taxes affect what you take home or bring to the table, which in turn shapes list price and offer structure. If you are selling, you might price to hit a target net after covering commission, any seller-paid taxes, and closing costs. If you are buying, you should weigh price versus credits, since a seller credit can reduce your cash to close.
There is a balance to strike. Pushing your list price higher to absorb taxes can reduce your pool of buyers. On the other side, offering credits in lieu of price cuts may keep comps cleaner while solving a buyer’s cash problem. Work from a net sheet or cash-to-close estimate so your pricing aligns with your real goals.
Seller playbook: protect your net
Start with the number you need to walk away with and model backward. Build in a buffer for transfer taxes if you plan to pay them, plus commissions, payoffs, prorations, and routine closing costs. Share a clean net sheet with prospective buyers to support your price and set expectations early.
Timing matters. Property tax prorations and any city assessments can change your bottom line depending on your closing date. Ask your title company for a preliminary settlement statement using the expected sale price and the contract’s allocation of taxes.
Buyer playbook: plan your cash to close
Ask your lender and title company for early estimates. The Loan Estimate and the Closing Disclosure outline buyer-side charges, including any buyer-paid recording taxes and prepaids. Review these with your agent so there are no surprises.
Use negotiation to solve for cash. You can request seller credits to offset closing costs, which can include buyer-paid recording charges. Lenders may cap how much a seller can contribute under certain loan programs, so confirm limits with your lender before you negotiate.
Simple models you can use
Seller net-proceeds template
Use this checklist to estimate what you will clear at closing:
- Sale price
- Less: real estate commission
- Less: seller-paid transfer tax if applicable
- Less: mortgage payoff(s) and any release fees
- Less: liens, judgments, or assessments paid at closing
- Less: prorations for taxes or dues
- Less: seller closing costs and title fees
- Less: seller credits to buyer
- Less: repairs or required escrows
- Add: seller credits due back to you
- Result: estimated net proceeds
Buyer cash-to-close template
Use this to estimate funds needed at settlement:
- Sale price
- Less: loan amount if financing
- Down payment equals price minus loan amount
- Plus: buyer closing costs and lender fees
- Plus: title insurance premiums if buyer pays
- Plus: buyer-paid recordation taxes and recording fees
- Plus: prepaids and escrow deposits
- Less: any seller credits
- Result: total estimated cash to close
Quick formulas for planning
- Transfer tax for a party equals sale price times that party’s transfer tax rate
- Mortgage recordation tax equals mortgage amount times the applicable rate
- Seller net equals price minus commission, taxes, payoffs, closing costs, prorations plus any credits
- Buyer cash equals down payment plus buyer closing costs, recordation taxes, and prepaids minus seller credits
Hypothetical example for clarity
This example is for illustration only. It is not a statement of DC rates.
- Sale price: 600,000
- Commission at 5 percent: 30,000
- Hypothetical seller transfer tax at 1 percent: 6,000
- Mortgage payoff: 350,000
- Seller closing costs and prorations: 3,500
- Seller credit to buyer: 2,000
Estimated seller net in this hypothetical:
- 600,000 minus 30,000 minus 6,000 minus 350,000 minus 3,500 minus 2,000 equals 208,500
Estimated buyer cash-to-close in this hypothetical:
- Down payment at 20 percent: 120,000
- Loan fees: 3,000
- Hypothetical buyer mortgage recordation tax at 1 percent on a 480,000 loan: 4,800
- Title policies and prepaids: 4,200
- Less seller credit: 2,000
- Total cash to close equals 130,000
For your real numbers, ask your title company for a preliminary settlement statement using your contract terms and financing details.
Price versus credits: choosing the lever
Use the right tool for the goal. If your priority is a clean comp for the neighborhood, a seller credit can solve the buyer’s cash need without dropping the headline price. If you need to widen the buyer pool, a price reduction may bring more showings and offers.
Normalize comps when comparing options. If nearby sellers priced higher to absorb taxes, bring that into your analysis rather than copying the list price. Your agent can show a net comparison that adjusts for taxes and credits so you see apples to apples.
When to call the title or tax pros
Loop in the closing team early any time the structure is complex or an exemption might apply. Title and settlement officers in DC calculate exact transfer and recordation charges and will confirm documentation for any exemption.
Situations worth a quick consult include:
- Transfers that claim exemptions, such as intra-family or court-ordered transactions
- Nonstandard structures like seller financing, assumptions, or partial interest sales
- Short sales, foreclosures, or tax sales
- Multi-parcel or unique condo scenarios, or any known municipal liens or assessments
- Portfolio or nonstandard loans that may affect recordation treatment
Watch for red flags:
- A mismatch between your contract’s allocation of taxes and the title company’s draft settlement sheet
- A claimed exemption without a clear statutory basis and title approval
- Large or unusual credits that could change the taxable consideration
- Any expected post-closing adjustments not spelled out in the contract
Next steps for DC sellers and buyers
- Ask your title company for a preliminary settlement statement based on your price, loan amount, and contract allocations.
- Model at least two scenarios: seller pays transfer tax, buyer pays transfer tax, and a seller-credit option.
- If you are selling, set a list price that supports your target net while staying competitive with local comps.
- If you are buying, confirm lender limits on seller credits and weigh price versus credit requests before you write the offer.
- Reconfirm figures with your title and lender teams a few days before closing, then update your model so there are no surprises.
If you want help modeling your net or structuring offers that work in today’s DC market, connect with T&G Real Estate Advisors. Our team will walk you through the numbers, coordinate with title and lending partners, and help you move forward with clarity.
FAQs
In Washington, DC, who pays transfer and recordation taxes?
- The allocation is negotiated and documented in the purchase contract and settlement statement, and should be confirmed by your title or closing officer.
Can a DC seller raise list price to cover transfer taxes?
- Yes, you can price to a target net, but this may affect buyer interest, so compare against local comps and consider using a seller credit instead.
Are DC transfer or recordation taxes refundable after closing?
- Generally no, these are one-time government taxes at closing, and any limited exemptions must be validated by the title company before settlement.
Do these taxes apply on a refinance in DC?
- Simple refinances do not typically trigger a deed transfer tax, but mortgage recordings can carry recordation charges, so confirm with your title company and lender.
How can I see my exact transfer-tax cost before listing or offering?
- Request a preliminary settlement statement from a local title or settlement company using your actual price, loan amount, and contract allocations.
