Washington State Real Estate Excise Tax exemptions?

Question

Has anyone read through the RCW to find the exemptions or otherwise found an article that lists the exemptions? From what I see foreclosure, transfer to family members under specific circumstances and transfers of "devise" are exempt. Since I wouldn't be selling to family or letting it get foreclosed on, none of those apply to me. But the devise one might, as I plan to 10-31 exchange the property.

I'd either 10-31 in state OR out of state. I suspect if I do it out of state there is no exemption, but I'm sure someone here has run into this before.

Aaron Miley · Answer

@Steve Vaughan Glad I could help!

Steve Vaughan · Answer

Nicely done @Aaron Miley!  Learned my new thing for the day (and it's a big one!).  Appreciate it!

Aaron Miley · Answer

Ah, for some reason I missed the out of state bit. Doesn't help when I'm replying before coffee!

Good luck with the taxes, it's definitely out of my realm of expertise. I'm just a great RCW researcher!

Steve Vaughan · Answer

As far as I know, any arms-length change of ownership gets hit.  1031 or no, title has transferred and the state will get theirs.

What I have done is keep my ownership (membership) % below 50% in my commercial property LLCs.  If less than 50% changes hands in a calendar year, there is no excise tax.  My wife and I each own 48%, my 2 minor boys 2% each.  There is no age minimum for WA LLC members.  We can sell the LLC over 3 calendar years with no excise tax.  Right now that would be a savings in the 10s of thousands.   It may not work out all as planned one day, but I set it up this way as an option to us because of the WA excise transfer tax @Jack B.

Jack B. · Answer

@Aaron Miley

Aaron, that was helpful indeed. That link led to this RCW (

http://app.leg.wa.gov/RCW/default.aspx?cite=82.45.105

So that is good in that it reduces my expenses drastically buying and selling IN state. Unfortunately no relief if 10-31 exchanging out of state. I guess I might just end up refinancing these and reinvesting the money in Florida. Cheaper to refinance than pay realtors fees alone, not to mention excise tax, 10-31 exchange fees, etc. This way I still have West Coast property for appreciation with a bit of cash flow and property management in place and cash flow property in Florida where I want to relocate to eventually. PLUS, this way if I don't like Florida or things there change, I can move back to Seattle for a few thousand dollars in moving costs and a cross country road trip! But that's for another thread.

RCW 82.45.105

Single-family residential property, tax credit when subsequent transfer of within nine months for like property. Where single-family residential property is being transferred as the entire or part consideration for the purchase of other single-family residential property and a licensed real estate broker or one of the parties to the transaction accepts transfer of said property, a credit for the amount of the tax paid at the time of the transfer to the broker or party shall be allowed toward the amount of the tax due upon a subsequent transfer of the property by the broker or party if said transfer is made within nine months of the transfer to the broker or party: PROVIDED, That if the tax which would be due on the subsequent transfer from the broker or party is greater than the tax paid for the prior transfer to said broker or party the difference shall be paid, but if the tax initially paid is greater than the amount of the tax which would be due on the subsequent transfer no refund shall be allowed.

Single-family residential property, tax credit when subsequent transfer of within nine months for like property.

Where single-family residential property is being transferred as the entire or part consideration for the purchase of other single-family residential property and a licensed real estate broker or one of the parties to the transaction accepts transfer of said property, a credit for the amount of the tax paid at the time of the transfer to the broker or party shall be allowed toward the amount of the tax due upon a subsequent transfer of the property by the broker or party if said transfer is made within nine months of the transfer to the broker or party: PROVIDED, That if the tax which would be due on the subsequent transfer from the broker or party is greater than the tax paid for the prior transfer to said broker or party the difference shall be paid, but if the tax initially paid is greater than the amount of the tax which would be due on the subsequent transfer no refund shall be allowed.

Washington State Real Estate Excise Tax exemptions?

Most Popular Reply