Excise Tax when wholesaling in Washington State

[Spencer Bowen]

Dear Washington state wholesalers ,  

I was just reading through the RCW on excise tax and found this little nugget below (RCW 458-61A-104 para (1)(b)).  Can anyone help me understand paragraph 1(b)?  It seems like if I sign a contract with a seller for a price, say $100,000, and then assign the contract for $10,000 to another buyer, excise tax would be due for $110,000.  Is that what this is saying?  If so, what other ways to execute an assignment could avoid this tax?

Thanks!

Spencer

458-61A-104
Assignments.

(1) Purchasers.

(a) The real estate excise tax does not apply to an assignment of a purchaser's interest in an earnest money agreement if neither the earnest money agreement nor its assignment results in a change of title to or ownership of the real property.

(b) The real estate excise tax does apply to transfers when the purchaser of real property under a real estate contract assigns the purchaser's interest in the contract for consideration. The tax is based on all consideration paid or contracted to be paid to the grantor for the assignment, including any unpaid principal balance due on the assigned real estate contract.

[Aaron Miley]

RCW, clear as mud sometimes.

*DOES NOT CONSTITUTE LEGAL ADVICE, CONSULT WITH AN ATTORNEY OR CPA REGARDING LEGAL AND TAX MATTERS!*

From what I can interpret on this, is that you do not owe taxes when you assign the contract. So remember, the seller is paying the excise tax. If you double close, you get to pay the excise tax on $110K. Washington is weird with assignments, because it can also be considered brokering, so if you don't have a broker's license there is a risk of being fined. 

Again, I could be totally wrong in this matter, but opinions seem to sway that assignments are risky in WA.