If you are buying or selling property, understanding the Washington State real estate excise tax is essential. This tax applies to most sales of real property and can significantly affect total closing costs, especially for sellers.
Often referred to as REET, this state tax is triggered by the transfer of property ownership and is collected at the time of sale. Knowing how it works, who pays it, and how it is calculated can help taxpayers avoid surprises and stay compliant with state and local requirements.
What is the real estate excise tax in Washington State?
The real estate excise tax is a transaction based tax imposed on the sale or transfer of real property. It applies to most sales of real estate, including residential homes, commercial buildings, vacant land, and certain mobile home transactions.
This tax is assessed on the selling price or the property’s true and fair value, whichever is higher, at the time of sale. It is not an annual property tax and does not depend on how long you owned the property. Instead, it applies only when a conveyance document is recorded to transfer ownership.
Under state law, including RCW 82.45, the tax must be paid before the county auditor will record the deed.
Oversight and administration of this tax is handled by the Washington State Department of Revenue, which publishes official guidance, rates, and filing requirements.
Is real estate excise tax the same as property tax or capital gains tax?
No. These taxes are often confused, but they serve very different purposes.
Property tax is an annual tax based on assessed value and funds local services. Capital gains tax applies to profits earned from selling certain assets. The real estate excise tax is a state tax imposed on the act of transferring property ownership, regardless of profit or loss.
Because REET applies even when a property sells at a loss, sellers should include it when evaluating the full cost to sell a house in Washington State.
Who pays real estate excise tax?
In Washington State, the seller is generally responsible for paying the real estate excise tax. The seller is considered the taxpayer, even though escrow agents typically collect and remit the payment as part of closing.
While buyers do not usually pay REET directly, it still influences negotiations. Sellers often factor this tax into pricing decisions and net proceeds, particularly in higher value markets.
How Washington State real estate excise tax is calculated
The total tax owed depends on the selling price and the applicable tax rate structure, which includes both state and local components.
State REET rates
Washington uses a graduated tax structure for most sales of real property. Portions of the sale price are taxed at increasing rates.
Current state REET rates for most properties are:
- 1.10 percent on the portion up to $525,000
- 1.28 percent on the portion from $525,001 to $1,525,000
- 2.75 percent on the portion from $1,525,001 to $3,025,000
- 3.00 percent on the portion above $3,025,000
Timberland and agricultural land are taxed at a flat rate of 1.28 percent rather than using the graduated brackets.
Since the tax is calculated based on the final sale price, understanding how much my house is worth can help sellers estimate their excise tax exposure more accurately.
Up to date real estate excise tax rates are published directly by the Department of Revenue.
Local real estate excise tax rates
In addition to the state portion of the real estate excise tax, many cities and counties in Washington charge their own local excise taxes. These local rates are applied on top of the state tax and are calculated as flat percentages of the full selling price.
Unlike the state portion, which uses a graduated structure, local real estate excise tax rates do not change based on price brackets. Whether a home sells for $400,000 or $1,400,000, the same local percentage typically applies to the entire sale price.
Local REET revenue is used to fund community level programs and services. Depending on the jurisdiction, these funds may support the general fund, affordable housing initiatives, transportation projects, or the public works assistance account. Because each city and county sets its own rates, the local portion of the tax can vary significantly from one location to another.
For sellers, this means total excise tax costs are highly location specific. Two homes sold for the same price can owe different amounts in real estate excise tax simply because they are in different cities or counties. To avoid surprises at closing, sellers should confirm the applicable local rates for their property early, ideally with their escrow provider or by reviewing the latest guidance from the Washington State Department of Revenue.
How to calculate the real estate excise tax
To calculate the total excise tax owed:
- Apply the graduated state rates to the applicable portions of the sale price
- Identify the combined local excise tax rates for the city and county
- Multiply the local rate by the full selling price
- Add the state and local totals together
The result represents the total real estate excise tax due at the time of sale.
Example calculation
Imagine you sell a home for $750,000 in a city with a 0.5 percent local excise tax. The property is not agricultural land or timberland.
Step 1: Calculate the state portion
- First $525,000 taxed at 1.10 percent
$525,000 × 1.10% = $5,775 - Remaining $225,000 taxed at 1.28 percent
$225,000 × 1.28% = $2,880
Total state excise tax:
$5,775 + $2,880 = $8,655
Step 2: Calculate the local portion
- $750,000 × 0.5% = $3,750
Step 3: Add them together
- State excise tax: $8,655
- Local excise tax: $3,750
Total real estate excise tax due: $12,405
This amount is typically paid by the seller at closing and must be paid before the deed can be recorded with the county auditor.
Real estate excise tax affidavit and required forms
Every taxable transfer requires filing a real estate excise tax affidavit. This affidavit documents transaction details such as the sale price, property type, and any claimed exemption.
The affidavit is submitted with the conveyance document to the county auditor’s office. In some cases, a supplemental statement is required, particularly for transfers of controlling interests or complex ownership structures.
Detailed filing rules and exemption criteria are further defined in the Washington Administrative Code.
Exemptions from real estate excise tax
Certain transfers qualify for an exemption, but these are narrowly defined and strictly reviewed by the Department of Revenue.
Common scenarios include:
- Transfers through probate or inheritance
- Gifts with no consideration
- Transfers involving governmental entities
- Transfers between spouses due to divorce
- Title corrections with no change in beneficial ownership
Each exemption must be properly claimed on the affidavit and supported with documentation. Incorrectly claiming an exemption can result in penalties or reassessment.
What happens if real estate excise tax is not paid?
The excise tax must be paid before the deed can be recorded. If payment is not made, the county auditor will not record the transfer, meaning ownership does not legally change.
Failure to pay may result in interest, penalties, or liens enforced by the Department of Revenue or the county treasurer’s office. This is why escrow agents ensure REET is collected and remitted at closing.
Why professional guidance matters
Because Washington State real estate excise tax involves graduated rates, local variations, and strict exemption rules, professional guidance is often valuable.
A knowledgeable real estate agent or escrow professional can:
- Estimate excise tax accurately
- Identify valid exemptions
- Ensure excise tax forms are completed correctly
- Prevent closing delays or compliance issues
In addition to REET, sellers should review all Washington State closing costs to understand their full financial picture before listing.
Key takeaways
The Washington State real estate excise tax applies to most sales of real property and is typically paid by the seller at the time of sale. It is calculated using graduated state rates plus local rates and must be paid before ownership can be legally transferred.
Understanding how this tax works allows sellers to price confidently, plan closing costs accurately, and avoid last minute surprises. For homeowners who want to reduce uncertainty around timelines and transactions, exploring cash offers in Seattle can be an alternative path that simplifies the selling process, even though excise tax still applies.
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