Effective Jan. 1, 2020, ESSB 5998 made changes to the real estate excise tax program, which can have a significant impact on certain property transactions, said Peter Abbarno and Todd Rayan, partners with the law firm Althauser Rayan Abbarno, LLP.
The real estate excise tax is imposed at the following rates, beginning January 1st:
- 1.1 percent if the selling price is equal to or less than $500,000;
- 1.28 percent on the portion of the selling price that is greater than $500,000, but equal to or less than $1,500,000;
- 2.75 percent on the portion of the selling price that is greater than $1,500,000, but equal to or less than $3,000,000; and
- 3 percent on the portion of the selling price that is greater than $3,000,000.
A rate of 1.28 percent is imposed on the sale of undeveloped land, timberland, agricultural land, and water or mineral rights, regardless of selling price.
There have been a lot of land classification and REET rate questions towards the end of the year, said Peter Abbarno, attorney with Althauser Rayan Abbarno. For certain property transactions, it was very important to finalize prior to January 1 and avoid the tax increase.
Real estate excise tax (REET) is a tax on the sale of real estate. The real estate excise tax is typically paid by the seller of the property, although the buyer is liable for the tax if it is not paid. The tax applies to the seller. The tax also applies to transfers of controlling interests (50% or more) in entities that own property in the state.
Continue reading Buying or Selling Property: Real Estate Excise Tax (REET) goes up January 1st!