[WSBAPT] REET Question/Exemption

[Joshua McKarcher]

Ugh. This is what I get for replying on iPhone when I’m supposed to be not working. Your email BEGINS quite literally “Co-habitants go on title of property together . . . ” Sigh . . .

So the only thing I can do to salvage my sloppy "contribution" is to say that if you have not looked at the insanely tiny print on the back (or "instructions to") the REETA GIFT SUPPLEMENT, do so.

There are several examples about those who share in the mortgage payments even if not legally obligated on them.

Even if this situation does not appear to involve a gift of equity as those examples may be "aimed at," I suspect the examples will help guide your analysis.

Then call the phone number that is (maybe, I'm thinking?) in the paragraph about what to do if there is a refinancing occurring simultaneously with the gift of equity.

Again, I've always had great help from that department and have never waited on hold for a real human.

Again my apologies for my poor reading skills!

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 samuel at meylerlegal.com <samuel at meylerlegal.com>
Sent: Tuesday, December 27, 2022 11:36 PM
To: 'WSBA Probate & Trust Listserv' <wsbapt at lists.wsbarppt.com>
Subject: Re: [WSBAPT] REET Question/Exemption

Sorry, perhaps my email was unclear.  Borrower and Ex are both on title and have been since the purchase.  Lender did not want Ex as a party to the loan because of their credit but they are still on title and Lender allowed it.  Ex needs to be removed from title, which is triggering the filing of a REETA.


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>

NOTICE:

This electronic message contains information which may be Confidential or Privileged and constitutes an electronic communication within the meaning of the Electronic Communications Privacy Act 18 USC 2510. The information is intended to be for the use of the individual or entity named above.  If you are not the intended recipient, please be aware that any disclosure, copying, distribution or use of the contents of this information is prohibited.  If you received this transmission in error, please notify the sender and delete the copy you received together with any attachments.  Thank you.

From: wsbapt-bounces at lists.wsbarppt.com <wsbapt-bounces at lists.wsbarppt.com> On Behalf Of Joshua McKarcher
Sent: Tuesday, December 27, 2022 7:36 PM
To: WSBA Probate & Trust Listserv <wsbapt at lists.wsbarppt.com>
Subject: Re: [WSBAPT] REET Question/Exemption

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<mailto:wsbapt-bounces at lists.wsbarppt.com> <wsbapt-bounces at lists.wsbarppt.com<mailto:wsbapt-bounces at lists.wsbarppt.com>> on behalf of msilver at wolfenet.com<mailto:msilver at wolfenet.com> <msilver at wolfenet.com<mailto:msilver at wolfenet.com>>
Sent: Tuesday, December 27, 2022 6:30 PM
To: 'WSBA Probate & Trust Listserv' <wsbapt at lists.wsbarppt.com<mailto: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<mailto:wsbapt-bounces at lists.wsbarppt.com> <wsbapt-bounces at lists.wsbarppt.com<mailto:wsbapt-bounces at lists.wsbarppt.com>> On Behalf Of samuel at meylerlegal.com<mailto:samuel at meylerlegal.com>
Sent: Tuesday, December 27, 2022 3:47 PM
To: 'WSBA Real Property Listserv' <wsbarp at lists.wsbarppt.com<mailto:wsbarp at lists.wsbarppt.com>>; wsbapt at lists.wsbarppt.com<mailto: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>

NOTICE:

This electronic message contains information which may be Confidential or Privileged and constitutes an electronic communication within the meaning of the Electronic Communications Privacy Act 18 USC 2510. The information is intended to be for the use of the individual or entity named above.  If you are not the intended recipient, please be aware that any disclosure, copying, distribution or use of the contents of this information is prohibited.  If you received this transmission in error, please notify the sender and delete the copy you received together with any attachments.  Thank you.

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