Changes to WA State Excise Tax
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 flat 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%. 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 $500,000 but 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 greater than $3,000,000 (3.5% total*)
In general, most home sellers will not be adversely affected 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.
Check out this video from Matthew Gardner, the Windermere local economic expert!