News

October 1, 2006 -- The District of Columbia has passed emergency legislation amending the Fiscal Year 2007 Budget Support Act of 2006.

The emergency legislation (Deed Transfer and Recordation Clarification Emergency Amendment Act of 2006) expands the scope of the .35% recordation and transfer tax increase to include non-exempt security interests (e.g. mortgages, deeds of trust). The .35% increase will now apply to all non-exempt security interests no matter the amount secured.

Therefore, effective October 1, 2006, recordation and transfer taxes will increase from 1.1% to 1.45% for many deeds and deeds of trust.

Please be reminded that the increase in recordation and transfer taxes does not apply to the following transactions which will continue to be taxed at their current rates:

• Deeds transferring residential properties for a consideration of less than $400,000.00 (recordation tax 1.1%; transfer tax 1.1%); and
• Economic interest deeds (recordation tax 2.2%).

Please remember that the increase in the recordation and transfer taxes applies to all instruments executed on or after October 1, 2006. Instruments fully executed prior to October 1, 2006 will continue to be taxed at the current rate even though submitted for recordation on or after October 1, 2006.

Note: For purposes of determining the execution date of any instrument, the Recorder of Deeds has indicated that it will look to the bearing date or acknowledgment date on the instrument and to the execution date of the HUD-1 Settlement Statement or closing statement. The applicable HUD-1 Settlement Statement or closing statement must accompany all instruments presented for recording.