Substantial Changes Coming To Washington State Excise Tax
On January 1, 2020, Washington state’s new graduated real estate excise tax takes effect. The excise tax (aka transfer tax) is paid upon closing the sale of real property. The amount of tax changes depending on the value of the sold property. The existing excise tax is a flat 1.28%.
The new excise tax is graduated, meaning the percentage increases on defined tranches of sale proceeds as the sale price increases. Below is a list of the graduated tax brackets based on sale price, and the new excise tax rate assigned to each bracket. The increases at $1.5M and $3M are noteworthy:
- Sales on property below $500,000 – 1.10% (a small reduction)
- Sale proceeds between $500,000 and $1.5 million – 1.28% (unchanged)
- Sale proceeds between $1.5 million and $3 million – 2.75% (105% increase)
- Sale proceeds over $3 million – 3.0% (115% increase)
Additionally, local excise tax (usually another 0.5%) will continue to apply. Prospective home buyers and sellers should take note of these changes and consider their pending effects. For more information on how the changes to Washington state’s real estate excise tax might affect you and any future transactions you are involved with, please reach out to the lawyers at Beresford Booth.