Following passage of Senate Bill 5998, and starting in January 2020, owners of residential real estate will see some significant changes in their Real Estate Excise Tax (REET) obligations when they decide to sell.
As it stands today, excise taxes are calculated at a at rate of 1.28% with municipalities adding their own tax on top of the state tax — generally cities* add 0.5% for a total of 1.78%.
See Examples of Home Value Influences of Sellers’ Tax Obligations
EXAMPLES OF SELLERS’ TAX OBLIGATIONS
The newly passed legislation changes this to a tiered system as shown below:
- 1.1% if the selling price is equal to or less than $500,000 (1.6% total*)
- 1.28% on the portion of the selling price that is greater than $500,000but equal to or less than $1,500,000 (1.78% total*)
- 2.75% on the portion of the selling price that is greater than$1,500,000 but equal to or less than $3,000,000 (3.25% total*)
- 3% on the portion of the selling price that is greaterthan $3,000,000 (3.5% total*)
In general, most home sellers will not be adversely a ected by this change, as homes priced at or below $1.5M will benefit from a tax cut, meaning that the increases primarily impact high-end home sellers.
Given current home values, 80% of Washingtonians are expected to receive a tax cut on the sale of residential real estate.
Want help figuring out how this will affect your specific situation? Get in touch – I’d love to help!
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