Washington State REET Changes - Is Your Glass Half Full?

By
Real Estate Broker/Owner with ViewHomes of Clark County - Nature As Neighbors

All real estate brokers in Washington should be aware of the changes to the Real Estate Excise Tax (REET) rates that went into effect January 1 of this year.


The new rates present a "glass is half full / half empty" scenario and (to mix metaphors) the benefits and drawbacks "are in the eye of the beholder."  The previous state tax rate was a flat 1.28% of the sales price for all properties. The new rates are graduated, which will reduce the tax for some properties and raise them for others*.


Other than farm or timber land, any property selling for $500,000 and under will have lower taxes this year.  Anything over $500,000 - you'll have to do some calculations, but there will be some savings. Once you hit $1,5000,001 and above, the rates are higher. 

 

For perspective, the Median Sale Price last year for Clark County was $371,000.  SO, the average home seller will benefit from the new rates this year. Remember. these are NOT property taxes, but taxes you pay when a property sells. 

 

The Department of Revenue (DOR) has published a handy table, with examples, detailing the new rates:
2020 WA REET Rates
Because this is a graduated tax, properties priced between $500,000.01 and $1,500,000 take advantage of the lower rate taxed on the first $500,000.  The example provide by the DOR:


Example A:

If the total sale price is $600,000, then the first $500,000 is taxed at 1.10%. The remaining $100,000 is taxed at 1.28%.

Graduated Tax on $600,000

(Last year's tax would have been $7,680.)

 

Example B:

If the total sale price is $4.4 million, then the first $500,000 is taxed at 1.10%. The next $1 million is taxed at 1.28%. The next $1.5 million is taxed at 2.75% and the final $1.4 million is taxed at 3%.

REET Tax on 1.400.000

*Note: These new rates do not affect the added local excise rates, typically .50%

 

To help with calculations, here is a convenient REET Tax Calculator spreadsheet available for download.  Since the tax is paid at closing, title will calculate and pay it - typically out of the seller's settlement.  


But as an added service to your clients you should provide them with an estimate of the new excise taxes prior to closing. That way you can be the bearer of good news if their sales price falls into the range where "the glass is half full."

 

Posted by

 

ViewHomes™ grew out of our passion for nature, beautiful surroundings, and peaceful environments. Starting together in an urban environment, over the years we've gravitated towards areas with smaller populations and less density. We now enjoy our lifestyle in a rural environment, but with close proximity to metropolitan areas where we appreciate all the amenities of fine restaurants, shopping, and an easy drive to an international airport.
Living in ViewHomes™ is like having “elbowroom for the soul”.

 

360-608-4900 

info@natureasneighbors.com
 

                                                                             

 

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Rainmaker
5,611,244
Roy Kelley
Realty Group Referrals - Gaithersburg, MD

This is great information to share with area residents as well a prospective home buyers.

Have a very special weekend. It is snowing in Maryland this morning.

Jan 18, 2020 07:39 AM #4
Rainmaker
1,846,660
Lottie Kendall
Compass - San Francisco, CA
Helping make your real estate dreams a reality

You explained the Washington state REET tax change well, Debb. Do you send this out to your clients and sphere, either via snail mail or email? 

Jan 18, 2020 07:42 AM #5
Ambassador
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Debb Janes EcoBroker and Bernie Stea JD
ViewHomes of Clark County - Nature As Neighbors - Camas, WA
REALTORS® in Clark County, WA

Lottie Kendall good question. Bernie just wrote this and we will be sending it out, just haven't decided on the format yet. 

Jan 18, 2020 07:49 AM #6
Ambassador
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Debb Janes EcoBroker and Bernie Stea JD
ViewHomes of Clark County - Nature As Neighbors - Camas, WA
REALTORS® in Clark County, WA

Sharon Lee - yes this is good news for many. It is a big hit for sellers at closing as you add another .5% ( local) to the state REET. 

Jan 18, 2020 07:55 AM #7
Ambassador
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Debb Janes EcoBroker and Bernie Stea JD
ViewHomes of Clark County - Nature As Neighbors - Camas, WA
REALTORS® in Clark County, WA

Nina Hollander this is not a yearly thing. This is only going to impact a property when it sells.  It's a positive change for many, probably not for those multi-million dollar sales. 

Jan 18, 2020 07:56 AM #8
Ambassador
1,949,947
Debb Janes EcoBroker and Bernie Stea JD
ViewHomes of Clark County - Nature As Neighbors - Camas, WA
REALTORS® in Clark County, WA

Ron and Alexandra Seigel - we will give them your regards.  

Jan 18, 2020 07:57 AM #9
Ambassador
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Debb Janes EcoBroker and Bernie Stea JD
ViewHomes of Clark County - Nature As Neighbors - Camas, WA
REALTORS® in Clark County, WA

Roy Kelley we are thankful our snow has melted. We are heading up to the Seattle area this morning to spend time with our son and his family. They are here from Alaska for a weekend basketball tourney ( our 12 year old grandson is participating). We are grateful for clear roads.  

Jan 18, 2020 07:58 AM #10
Rainmaker
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Michael Jacobs
Pasadena, CA
Los Angeles Pasadena 818.516.4393

Hello Debb and Bernie - knowing and understanding these kinds of rules can be a lot more confusing than mixing metaphors.  That's why it is so important to enlist the expertise of an experienced local real estate representation.  

Jan 18, 2020 08:46 AM #11
Ambassador
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Debb Janes EcoBroker and Bernie Stea JD
ViewHomes of Clark County - Nature As Neighbors - Camas, WA
REALTORS® in Clark County, WA

Yes, it can be confusing Michael Jacobs 

Jan 18, 2020 09:00 AM #12
Rainmaker
1,313,878
Sheri Sperry - MCNE®
Coldwell Banker Residential Brokerage - Sedona, AZ
(928) 274-7355 ~ YOUR Solutions REALTOR®

Hi Debb Janes EcoBroker and Bernie Stea JD - We do not have an excise tax on real estate here in AZ. I was a little befuddled when you brought the topic up. 

In AZ, it is widely thought that it could hurt sales especially in areas like Scottsdale. 

California is trying to mess with Prop 13.  It is a slippery slope messing with property taxes!

I hope this does not affect your property sales in Camas. Hopefully, this is not a dramatic change from past practice.

Jan 18, 2020 09:17 AM #13
Rainmaker
1,414,034
Carol Williams
Although I'm retired, I love sharing my knowledge and learning from other real estate industry professionals. - Wenatchee, WA
Retired Agent / Broker / Property Manager

Hi Debb,
That is a significant increase in excise tax for higher-priced homes! I had not kept up on this info so thanks for sharing.

Jan 18, 2020 01:01 PM #14
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Kathy Streib
Room Service Home Staging - Delray Beach, FL
Home Stager - Palm Beach County,FL -561-914-6224

Hi Debb and Bernie- this is information that is so helpful to homeowners in Washington state. This is what sets a real person agent apart from cyber-agents. 

Jan 18, 2020 04:57 PM #15
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Paul S. Henderson, REALTOR®, CRS
Tacoma, WA
South Puget Sound Washington Agent/Broker!

Thank you for the reminder. So many things in our legislature are tagged to come into affect January 1st of each year. This is good news for many of my clients.

Enjoy your Sunday Debb Janes EcoBroker and Bernie Stea JD 

Jan 19, 2020 10:00 AM #16
Rainmaker
4,228,037
Joan Cox
House to Home, Inc. - Denver Real Estate - 720-231-6373 - Denver, CO
Denver Real Estate - Selling One Home at a Time

Debb, this is excellent information to get out to your sphere of influence.  Great job.

Jan 21, 2020 05:41 AM #17
Rainmaker
3,305,437
Will Hamm
Hamm Homes - Aurora, CO
"Where There's a Will, There's a Way!"

Hello Debb,  This is so important that people know about in your state.  Good job writing about it.

 

Jan 21, 2020 08:01 AM #18
Rainmaker
2,112,498
Patricia Feager, MBA, CRS, GRI,MRP
DFW FINE PROPERTIES - Flower Mound, TX
Selling Homes Changing Lives

Debb Janes EcoBroker and Bernie Stea JD - Taxes are complicated. Knowing what to do and how it works is critical when owning and purchasing a home. Your blog post explains well information consumers in your area needs to know. 

Jan 21, 2020 12:33 PM #19
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Jeff Dowler, CRS
eXp Realty of California - Carlsbad, CA
The Southern California Relocation Dude

Hi Debb and Bernie:

This is certainly important information for people to know. A great opportunity to share with your clients and prospects!

Jeff

Jan 22, 2020 10:30 PM #20
Rainmaker
2,049,746
Grant Schneider
Performance Development Strategies - Armonk, NY
Your Coach Helping You Create Successful Outcomes

Good morning Debb Janes EcoBroker and Bernie Stea JD - it certainly is worthwhile sharing this information so that people are not surprised.

Jan 23, 2020 08:22 AM #21
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Debb Janes EcoBroker and Bernie Stea JD
ViewHomes of Clark County - Nature As Neighbors - Camas, WA
REALTORS® in Clark County, WA

Thanks all. This is important information and will definitely be a big $$$ hit to the multi-million dollar properties. The under-500 thousand folks are going to be smiling at closing. But again, it's impact is when a homeowner sells. D 

Jan 23, 2020 01:28 PM #22
Rainmaker
1,759,951
Lise Howe
Keller Williams Capital Properties - Washington, DC
Assoc. Broker in DC, MD, VA and attorney in DC

thanks for sharing the changes in the tax laws - so many things change each year - you need a score card

Jan 23, 2020 08:29 PM #23
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