Important Changes to WA’s Real Estate Excise Tax (REET) in 2020

Important Changes to WA’s Real Estate Excise Tax (REET) in 2020

The start of a new year is always accompanied by a bevy of new laws that go into effect on January 1st. So while we’re still working off the holiday desserts and settling back into our work routines, there’s a pile of new regulations that impact businesses, taxes, real estate, and family law. One notable change for 2020 affects Washington state’s real estate excise tax and will increase taxes for some real estate sales and decrease taxes for others.

What is REET?

The real estate excise tax, or REET, is a tax on sales of “real property” in Washington, which includes land or assets attached to land. This tax is usually paid by sellers, although buyers are legally responsible if the seller does not pay. REET applies not only to sales but also to ownerships transfers of 50% or more of the property’s value.

How is REET changing for 2020?

The changes for REET will be good news for some and bad news for others. Up till now, REET rates have been a flat 1.28% across the state. Now, however, REET rates will be calculated on a graduated scale based on the value of the property. Assets less than $500,000 will be taxed at 1.10%, those between $500,000 and $1.5 million will be taxed at 1.28%, between $1.5 million and $3 million will be taxed at 2.75%, and everything above will be taxed at 3%. This does not apply to agricultural and timberland.

Stay on Top of New Real Estate and Tax Laws in 2020

Real estate and tax laws are complicated enough at any given moment, let alone when they change. Even still, misunderstandings can have expensive consequences down the line. Make sure that you are on sound legal footing by working with an experienced real estate attorney like John L. Davis, PLLC. John serves individuals and businesses in Vancouver and Southern Washington to provide a solid foundation for long-term success. Call (360) 597-4740 today to schedule an appointment for your case.