Changes to State Excise Tax
Waiting To Sell May Mean a Higher Tax Rate!
On April 28th, 2019, The Washington State Legislature passed a 2-year budget that will have a significant impact on most sellers of commercial and residential real estate. Included in the budget is a “reformed and progressive” graduated Real Estate Excise Tax (REET). The REET legislation was the centerpiece of the Legislature’s efforts to raise revenue and make Washington’s tax system more progressive.
These Changes will go into effect on Janurary 1st 2020.
Sales under $500,000: 1.1% tax rate (down from 1.28%)
Sales from $500,000 to $1,500,000: 1.28% tax rate (unchanged and 1.1% marginal rate on first $500k)
Sales from $1,500,000 to $3,000,000: 2.75% tax rate (115% increase, but marginal rate increase means first $500k @1.1%, then $500k to $1.5M @ 1.28%)
Sales over $3,000,000: 3.0% tax rate (134% increase, marginal rates in effect)
Unimproved property (land for development), agricultural land, and timber land remains at the 1.28% rate, regardless of price.
Local REET rates (most commonly 0.5%) are added to the state rate. The new combined state and local REET rates for Seattle, Tacoma, Spokane, Vancouver, Bellevue, and most of urban and suburban Washington will be 1.6%, 1.78%, 3.25%, and 3.5%.
If you have more questions about the new (REET) or would like help with taking advantage of the current rates before they change get in touch with us today! We’re here to help!