[WSBAPT] Sale of house to heir with credit for inheritance share - and REET

[Joshua McKarcher]

I think you can probably take the partial exemption, but you can call DOR and probably get a shockingly straightforward and very helpful answer, honestly.

Go here: https://app.leg.wa.gov/WAC/default.aspx?cite=458-61A-202

Read (4) re nonprorata to see if it helps. May not given the way this was structured, but I don’t think DOR will split this hair.

And especially read (5)(c) which should “get you there” (probably, maybe 😉) because it does discuss “taking title directly from the [PR]” even though in a section about subsequent transfers . . .

(c) Example 4. Sheri and her two sisters inherit their father's home, valued at $180,000, in equal portions. Sheri wants sole ownership of the home, but there are not "in-kind" assets of sufficient value to be distributed by the personal representative to her two sisters in a nonpro rata distribution. In order to take title directly from the personal representative, Sheri pays each of her sisters $60,000, and they quitclaim their right to the property under the will. Real estate excise tax is due on the total of $120,000 paid for the property.

From: wsbapt-bounces at lists.wsbarppt.com <wsbapt-bounces at lists.wsbarppt.com> On Behalf Of Eric Nelsen
Sent: Wednesday, November 8, 2023 6:06 PM
To: 'WSBA Probate & Trust Listserv' <wsbapt at lists.wsbarppt.com>
Subject: [WSBAPT] Sale of house to heir with credit for inheritance share - and REET

Estate sells house to an heir for defined Purchase Price of $500,000, and provides a credit of $50,000 against the Purchase Price as a partial distribution of inheritance.

What should Real Estate Excise Tax be calculated upon?


  1.  $450,000, because the consideration received is only that? BUT: Do the parties list $450,000 as the Purchase Price on the REET Affidavit, despite the prima facie specification of $500,000 as the Purchase Price? Or does escrow valiantly attempt to list $500,000 as the Purchase Price, list an exemption for $50,000 and cite the inheritance WAC and provide the proper documentation, and then cross fingers and pray it doesn’t get screwed up?
  2.  $500,000, because it’s better to pay more tax than it is the deal with the deed getting bounced because it looks funny to somebody at the recorder’s office?

The form does seem to allow for a partial exemption, but I’ve never attempted it. Does it actually work?
[cid:image001.png at 01DA1270.815DDBA0]

Sincerely,

Eric

Eric C. Nelsen
Sayre Law Offices, PLLC
1417 31st Ave South
Seattle WA 98144-3909
206-625-0092
eric at sayrelawoffices.com<mailto:eric at sayrelawoffices.com>

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