[WSBAPT] RE Excise Tax question

[Eden Rubenstein Toner]

I’m trying to figure out the RE excise tax computation in this situation:
Client owns ½ interest in property.  A testamentary trust of which client is
Trustee owns the other ½.  There are no other assets in the trust.  Client
occupies the property and has paid mortgage, taxes, insurance and all
expenses for many years, keeping track of all payments and issuing a
promissory note from the trust to client each year.  The trust is now
indebted to client for more than the value of the trust’s interest in the
property.  Client wants to deed the property from the trust to client in
full satisfaction of the debt, despite the fact that the debt is greater
than the value of the property.

Questions—is tax due on the full amount of the debt being satisfied, or just
the actual amount satisfied?  Does it matter that the debt is not secured by
the property?  And if client continues to pay the full amount of the
mortgage, is half the outstanding mortgage value part of the excise tax
computation?

Thank you in advance for any guidance.

Eden

 

Eden Rubenstein Toner

Attorney at Law

1600-B SW Dash Point Road, #163

Federal Way, WA 98023

phone 206-953-4485

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