Recap of New Washington State Real Estate Excise Tax (REET)
May 1, 2019
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) that will result in Washington State having the highest real estate transfer tax rates in the country. The intent of the new tax structure is to reduce the tax obligation on the majority of the population while increasing it significantly on the wealthier population. The reformed tax matrix below will take effect on January 1, 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
Please contact one of our commercial real estate professionals if you would like further information about these tax changes.