UPDATE: Thanks to Timothy for this link. REET no longer applies to short sales. THANK GOODNESS! Washington Realtors Association sent out a notice to it's members this morning, saying that "The Department of Revenue (DOR) recently sent a letter to the Escrow Association explaining its position that in short sales, the Real Estate Excise Tax (REET) applies not only to the selling price of a home, but also any debt forgiven by the seller's lender." Of course, this is total crap. Why should you pay taxes on a price the market wouldn't bear out? NWMLS broke it down like (2 comments)