DC Offers two different opportunities to save money when buying a home not to be confused with one another:
1. DC First Time Homebuyer Program
2. DC Tax Abatement Program
These are two distinct programs in DC. The First Time DC Homebuyer Program (referenced by the pros as “FTDO” (fit-do)) is a program that lowers the buyer’s Recordation Tax if they meet certain price and income guidelines. If the Sales Price is $632,500 or less, and the buyer’s prior year’s AGI is within the income guidelines, the Recordation Tax is reduced from 1.45% or 1.1% (depending on the Sales Price) to 0.725%.
The DC Lower-Income Tax Abatement Program is a separate program with lower Sales Price and Income guidelines (Sales Price of $464,000; Income of $65,100 for a single member household). Tax Abatement uses lower limits because the benefits are much larger. In addition to the prior year’s 1040, Tax Abatement also requires the prior year’s W-2 and two current paystubs (since approval is based off of annualized income instead of the prior year’s AGI alone). If a buyer that qualifies for Tax Abatement, they are entitled to three significant benefits: