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D.C. Municipal Regulations (Last Updated: September 13, 2017) |
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Title 9. TAXATION AND ASSESSMENTS |
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Chapter 9-5. TAX ON RECORDATION OF DEEDS |
Section 9-502. PAYMENT OF THE RECORDATION TAX
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502.1The basis for the tax is the recordation of a deed and, except as otherwise provided in the Act or this chapter, the tax must be paid at the same time the deed is submitted for recordation. Deeds are required to be recorded as provided by D.C. Official Code § 47-1431.
502.1aThe Act applies to deeds reflecting the transfer of property or an interest in property from one person to another, whether the transfer occurs by conveyance or operation of law, including a transfer resulting from a merger, consolidation, liquidation or reorganization.
502.2The measure of the tax is the consideration for the property conveyed by the deed.
502.3In accordance with § 304 of the Act (D.C. Official Code § 42-1104), if there is no consideration for the property which is the subject of a deed, or where the consideration is nominal, consideration shall be construed to be the fair market value of the real property involved.
502.4The term "consideration," as defined in § 301(5) of the Act, as amended, (D.C. Official Code § 42-1101(5)), includes consideration actually paid or ultimately required to be paid for real property, whether that consideration is in the form of cash or is in some other form.
502.5The term "fair market value" shall have the same meaning as the term “estimated market value” defined in D.C. Official Code § 47-802(4).
502.6The term "nominal consideration' means any price paid or any item exchanged in return for title to real property which bears no reasonable resemblance to the fair market value of the real property. Any consideration paid which equals less than 30% of the fair market value of the property shall be deemed to bear no reasonable resemblance to the fair market value of the property and, therefore, shall be deemed to be nominal.
502.7The following formula shall be applied for purposes of determining if the consideration paid is 'nominal consideration':
The fair market value of the real property shall be multiplied by 30%. If the consideration paid is less than 30% of the fair market value of the real property for which a deed is submitted for recordation, the consideration paid shall be deemed to be nominal. If the consideration paid is deemed nominal, the recordation tax shall be based on the fair market value of the property. If the consideration paid is equal to or greater than 30% of the fair market value of the real property for which a deed is submitted for recordation, the consideration paid shall not be deemed to be nominal.
502.8Examples:
1.The consideration paid as stated on the recordation tax return is $ 20,000 and the fair market value of the property for which a deed is submitted for recordation is $ 75,000. 30% of the fair market value of the property is $ 22,500 ($ 75,000 X .30 = $ 22,500). Since the consideration paid is less than 30% of the fair market value of the property, the consideration paid shall be deemed to be nominal. In this case, the recordation tax shall be based upon the fair market value of the property.
2.The consideration paid as stated on the recordation tax return is $ 40,000 and the fair market value of the property for which a deed is submitted for recordation is $ 100,000. 30% of the fair market value of the property is $ 30,000 ($ 100,000 X .30 = $ 30,000). Since the consideration paid is more than 30% of the fair market value of the property, the consideration paid shall not be deemed to be nominal. In this case, the recordation tax shall be based on the consideration paid.
3.The consideration paid as stated on the recordation tax return is $ 36,000.00 and the fair market value of the property for which a deed is submitted for recordation is $ 120,000.00. 30% of the fair market value of the property is $ 36,000 ($ 120,000.00 X .30 = $ 36,000.00). Since the consideration paid is equal to 30% of the fair market value of the property, the consideration paid shall not be deemed to be nominal. In this case, the recordation tax shall be based on the consideration paid.
502.9If the Recorder of Deeds determines that the consideration paid is nominal, the recordation tax shall be determined based on the fair market value of the property for which a deed is submitted for recordation. The tax determined shall be paid at the time of recordation before the deed shall be accepted for recordation.
502.10In determining whether consideration paid is nominal, the Recorder of Deeds may use his discretion in considering any information available to him at the time of recordation from which the market value of the property may be determined. Such information may include, but is not limited to:
(a) the current assessed value of the property;
(b) a certified appraisal report that is not more than six months old;
(c) a contract for sale of the property;
(d) the settlement sheet for the sale of the real property; and
(e) any other document upon which the fair market value of the property may be determined.
502.11Any taxpayer aggrieved by a determination made by the Recorder of Deeds that the consideration paid is nominal may file a claim for refund in accordance with the provisions of D.C. Official Code § 47-3310.
502.12Any taxpayer aggrieved by a determination made by the Recorder of Deeds of fair market value used to calculate the recordation tax may file a claim for refund in accordance with the provisions of D.C. Official Code § 47-3310. Evidence of market value shall be submitted with the claim for refund.
502.13The provisions set forth in this section shall apply to all deeds submitted to the Recorder of Deeds for recordation, including deeds for foreclosure real estate transactions and deeds “in lieu of foreclosure.”
502.14When a single transaction includes a transfer of property or an interest in property by a deed that is taxed under the Act as well as property or an interest not taxed under the Act, the consideration shall be allocated between the taxed deed and nontaxed property or interest transferred for purposes of assessing the tax on the deed. The allocation shall be made on the recordation tax return and substantiated by documents establishing the agreement of the parties as to the allocation at the time of the transfer. The taxpayer has the burden of establishing the amount of consideration allocable to any nontaxable property or interest in property. In the absence of an allocation by the taxpayer, all consideration shall be allocated to the deed, unless otherwise adjusted by the Recorder of Deeds. The Recorder of Deeds shall not be bound by any allocation made on a recordation tax return and may adjust the allocation on audit.
502.15When a deed which conveys interests in real property located both within and outside the District of Columbia, the consideration for the deed or the amount of debt secured shall be allocated between the two categories of property, and the tax shall be imposed on the consideration for the deed or the amount of debt secured that is allocable to property within the District. The tax applies to the consideration payable or the amount of the debt secured in the same ratio that the value of the real property that is located in the District bears to the value of the entire property in the deed. The allocation shall be made on the recordation tax return and shall include such substantiation as the Recorder of Deeds shall deem appropriate.