502.1 The 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.

502.2 The measure of the tax is the consideration for the property conveyed by the deed.

502.3 In accordance with § 304 of the Act (D.C. Code § 45-924), 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.

502.4 The term 'consideration,' as defined in § 302 of the Act, as amended, (D.C. Code § 45-921(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.

502.5 The term 'fair market value' shall have the same meaning as defined in D.C. Code § 47-802(4).

502.6 The 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.

502.7 The 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.

502.8 Examples:

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. Therefore, the recordation tax shall be computed as follows:

$$(\$ 75,000 \times 100\%) \times .011 = \$ 825 \text{ (recordation tax due)}$$

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. Therefore, the recordation tax shall be computed as follows:

$$\$ 40,000 \times .011 = \$ 440 \text{ (recordation tax due)}$$

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. Therefore, the recordation tax shall be computed as follows:

$ 36,000 X .011 = $ 396 (recordation tax due)

502.9 If 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.

502.10 In 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.

502.11 Any 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. Code §§ 45-935 and 47-3310.

502.12 Any 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. Code §§ 45-935 and 47-3310. Evidence of market value shall be submitted with the claim for refund.

502.13 The 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."

SOURCE: Commissioners' Order 62-751 effective April 26, 1962, 8 DCR 278 (May 14, 1962); as amended by Final Rulemaking published at 46 DCR 8264 (October99).