[WSBAPT] REET Question/Exemption

[Joshua McKarcher]

What transaction is occurring that triggers the filing of a REETA at all? A refinancing with cash out maybe? But is that effectuating a change in title? It seems the title has always been in one name and is staying in that name.

So I’m just unclear what change in title is occurring, as opposed to the settlement of potential legal claims for contributions to equity or what have you. If those trigger excise tax, then that is simply an occasion I've not encountered.

But whenever I've called the DOR line (the number to which is buried somewhere on the gift supplement form) with an odd REETA situation, a very smart and helpful agent has answered and given me a helpful analysis and offered additional information such as what documentation would be required to support the exemption in an audit.

Best, Josh


Joshua D. McKarcher

McKarcher Law PLLC

537 6th Street

Clarkston, WA 99403

(509) 758-3345

(509) 758-3314 (fax)

josh at mckarcherlaw.com<mailto:josh at mckarcherlaw.com>

www.mckarcherlaw.com<http://www.mckarcherlaw.com/>

________________________________
From: wsbapt-bounces at lists.wsbarppt.com <wsbapt-bounces at lists.wsbarppt.com> on behalf of msilver at wolfenet.com <msilver at wolfenet.com>
Sent: Tuesday, December 27, 2022 6:30 PM
To: 'WSBA Probate & Trust Listserv' <wsbapt at lists.wsbarppt.com>
Subject: Re: [WSBAPT] REET Question/Exemption

Do you think this is it?
WAC 458-61A-204

…5) The sale of an interest in real property from one or more joint tenants or tenants in common to remaining tenants or to a third party is a taxable transaction. The taxable amount of the sale is the total of the following:
(a) Any consideration given; and
(b) Any consideration promised to be given, including the amount of any debt remaining unpaid on the property at the time of sale multiplied by that fraction of interest in the real property being sold.


From: wsbapt-bounces at lists.wsbarppt.com <wsbapt-bounces at lists.wsbarppt.com> On Behalf Of samuel at meylerlegal.com
Sent: Tuesday, December 27, 2022 3:47 PM
To: 'WSBA Real Property Listserv' <wsbarp at lists.wsbarppt.com>; wsbapt at lists.wsbarppt.com
Subject: [WSBAPT] REET Question/Exemption

Listmates,

Co-habitants go on title of property together but only one of them (“Borrower”) is liable on the note due to the lender.  Borrower makes payments on the loan directly while the other co-habitant (“Ex”) makes payments to the Borrower for half of the loan payment.  There is nothing in writing expressly stating that Ex is indebted to Borrower for 50% of the mortgage payment, but that is essentially what Ex pays to borrower for several years.

Borrower and Ex call it quits and wish to remove Ex from title.  There is some equity in the property now.  Borrower is willing to pay Ex 50% of the equity value and excise tax would be due on that amount.  I am questioning whether excise tax should also be due on 50% of the underlying debt given that the Ex was never personally liable on the note due to the bank.  It could appear to someone as though Ex was liable to Borrower for half the mortgage and has now been relieved of that liability.

Have you dealt with this before?  Would excise tax only be due on the value of the equity that Borrower pays Ex for?  What exemptions apply?  Thanks for the input.

Sam


Samuel M. Meyler
Meyler Legal, PLLC
1700 Westlake Ave. N., Ste. 200
Seattle, Washington 98109
Tel:  206.876.7770
Fax:  206.876.7771
Email:  samuel at meylerlegal.com<mailto:samuel at meylerlegal.com>

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