Washington's REET can add significant costs to your transaction. Understand the graduated rates and exemptions.
Washington's Real Estate Excise Tax (REET) is among the highest transaction taxes in the nation. Proper planning can minimize its impact.
## REET Structure
### State Tax (Graduated) Rates increase with sale price: - Up to $525,000: 1.1% - $525,001-$1,525,000: 1.28% - $1,525,001-$3,025,000: 2.75% - Over $3,025,000: 3%
### Local Tax Cities and counties add: - 0.25% minimum - Up to 0.5% in some areas - Total can exceed 3.5% on high-value properties
## Who Pays?
### Washington Custom - Seller typically pays - Can be negotiated - Contract should specify - Lenders may care for financing
## Exemptions and Exceptions
### Common Exemptions - Gifts between spouses - Certain family transfers - Foreclosure sales - Government acquisitions
### 1031 Exchanges - REET still applies - Deferred capital gains separate issue - Plan for tax in exchange funds
## Calculation Examples
### $800,000 Home - First $525,000 × 1.1% = $5,775 - Remaining $275,000 × 1.28% = $3,520 - State REET: $9,295 - Plus local (0.5%): $4,000 - Total: ~$13,295
### $2,000,000 Home Much more significant: - Progressive calculation - Total around $50,000+
## Planning Strategies
### Timing - Market conditions affect burden - Seller motivation matters - Negotiate in soft markets
### Structuring - Personal property allocation - Earnest money timing - Closing cost credits