Happy New Year to all from HLG! As we start into a new year and new decade, we want to advise you as to an increase in real estate excise tax (REET) paid upon closing real estate transactions. For larger transactions this increase is substantial.
Clark County Treasurer, Alisha Topper, has provided us the following information to share with you.
Changes are coming, get ready for an increase in the Real Estate Excise Tax
This past year more than 18,000 Clark County property owners sold a home or transferred a controlling interest of their property. A number of commercial, multifamily and industrial properties were sold as well.
Each seller is required to complete a real estate excise tax (REET) affidavit, and if not paid by the seller, the buyer is liable for the tax. Working with title companies and individuals, the Clark County Treasurer’s Office processes these payments on behalf of the Department of Revenue. In 2018, collections totaled nearly $92 million, of which the majority is retained by the state.
Effective Jan. 1, 2020, changes to the REET program take effect. The Washington State Legislature passed ESSB 5998 which created a graduated state REET rate structure for sales of real property.
There are two exceptions, agricultural and timber land, which are set at a rate of 1.28%. The new rate structure will be based on sale price, the more expensive the transaction, the higher the rate, which caps out at 3%.
Graduated REET Structure
|Sale price thresholds||Tax rate|
|$500,000 or less||1.10%|
|$500,000.01 – $1,500,000||1.28%|
|$1,500,000.01 – $3,000,000||2.75%|
|$3,000,000.01 or more||3%|
Other updates impact controlling interest transfers (50% or more change of ownership in an entity that owns real property). The new law expands the transfer period from 12 months to 36 months. It also changes the reporting requirements during the annual corporate renewal cycle to include disclosure of any transfers of 16% or more.
With these new changes, a new REET affidavit form was created and is available at www.dor.wa.gov/reet.
Those with questions are encouraged to reach out to the Department of Revenue at 360.534.1503, contact your local Treasurer’s Office or reach out to Steve Horenstein at firstname.lastname@example.org or call 360-597-0965.