The State of Washington (WAC 458-61A-100) imposes an excise tax on every sale of real estate in the State unless specifically exempted. The taxes imposed are due at the time the sale occurs, are the obligation of the seller and, in most instances, are collected by the county upon presentation of the documents of sale for recording in the public records. Excise Tax in most of King County is 1.78% of the sales price. There are still areas in the State that charge 1.53% and in some cases 1.28% (for a complete list you can visit http://dor.wa.gov).
There are certain instances where a transfer of real property may be exempt from excise tax, and the exemptions are all identified by a WAC (Washington Administrative Code). An example of an exemption would be WAC 458- 61A-202 (Inheritance or devise). In this example “transfers of real property by inheritance or devise are not subject to the real estate excise tax. For the purpose of this exemption it does not matter whether the real property transferred was encumbered by underlying debt at the time it was inherited or devised.”
Other exemptions include transfers between immediate family members, as long as the property is being gifted and the transferee is not assuming any debt, transfers from individuals into or out of a trust, and establishing community property. You may also have noticed that excise is not due on the sale of foreclosed property when the Lender or Trustee executes the deed.
There are many other exemptions that exist. It is always prudent to check with your escrow or title professional regarding excise exemptions. To access the list online, go to: http://apps.leg.wa.gov/WAC/default.aspx?cite=458-61A.
A final note: these days the Department of Revenue audits 100% of past transfers where exemption has been claimed and will impose penalties where applicable.
If you are looking for a title and escrow partner you can count on, Elizabeth is here to help you provide your clients with the added measure of service so essential in today’s competitive market. Elizabeth is a senior account manager at Chicago Title of Washing-ton. She can be reached by phone at 206-618-6786 or send an email to : Elizabeth.Peterson@ctt.com.
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