Lower Income Homeownership Exemption Program (DC Tax Abatement)

What is Lower Income Homeownership Exemption Program (DC Tax Abatement)?

Lower Income Homeownership Exemption Program (DC Tax Abatement) is down payment assistance for homebuyers in Washington, District of Columbia, administered by DC Office of Tax and Revenue (OTR), Recorder of Deeds / Real Property Tax Administration.

• Under D.C. Law 5-31 (D.C. Code 47-3502), qualifying lower-income owner-occupants are exempt from DC recordation and transfer taxes at purchase and receive up to a five-year abatement of real property taxes, beginning the October 1 after the deed is recorded. To qualify, total household gross income must fall under the published income limits (higher in Economic Development Zones) and the purchase price must not exceed $576,000. The benefit also extends, with certification, to non-profit housing organizations, shared-equity investors, cooperative housing associations, and community land trust transfers. Applicants file Form FP-420 with required income documentation when recording the deed.
• Exemption from DC recordation and transfer taxes at purchase.
• Up to 5-year real property tax abatement.
• Higher income limits in Economic Development Zones.
• Available for shared-equity and community land trust purchases.
• No repayment (tax exemption/abatement, not a loan).
• Funding comes from DC tax expenditure (forgone recordation/transfer tax and abated real property tax) under D.C. Law 5-31 / D.C. Code 47-3502.

Do you have to pay it back?

Lower Income Homeownership Exemption Program (DC Tax Abatement) is forgiven after 5 years, so a buyer who stays that long does not repay it.

• Repayment is triggered by If household ceases to qualify, owner must notify OTR in writing within 30 days; exemption ends when eligibility lost.
• Forgiveness and repayment terms are set by the program and can change — confirm them on the official program page before applying.

Who qualifies?

Lower Income Homeownership Exemption Program (DC Tax Abatement) is open to buyers who will live in the home as their primary residence.

What are the income limits?

Lower Income Homeownership Exemption Program (DC Tax Abatement) limits household income to $128,160.

• The limit applies to total household income, not only the borrower’s.
• The program lists a maximum household size of 8.
• Area median income figures are published by HUD and updated annually, so check the current table for the county before relying on a number.

What kind of home can it be used for?

Lower Income Homeownership Exemption Program (DC Tax Abatement) caps the purchase price at $576,000.

• Eligible property types include Single Family, Condo, and Cooperative.
• New construction is eligible.
• Manufactured homes are not eligible.

Where does it apply?

Lower Income Homeownership Exemption Program (DC Tax Abatement) serves buyers purchasing in Washington, District of Columbia.

How do you apply?

Applications for Lower Income Homeownership Exemption Program (DC Tax Abatement) go through DC Office of Tax and Revenue (OTR), Recorder of Deeds / Real Property Tax Administration, which publishes the current terms and the application steps on its own site.

1. 1

   Contact DC Office of Tax and Revenue (OTR), Recorder of Deeds / Real Property Tax Administration to reserve funds

   Funds are reserved through File Application FP-420 (and Claim for Exemption from Real Property Recordation and Transfer Tax) at time of recording deed; abatement application deadline is September 30 of the tax year, and are subject to availability.

2. 2

   Work with a lender who handles the program

   Hey Prescott is not a lender and does not accept applications; this page describes the program so a buyer can take it to a lender or housing counselor.