[WSBARP] Excise Tax on D/T

[Scott Hildebrand]

Michael-

Here’s another one for you on the same fact pattern.

 

I am transferring an encumbrance from one property to another. Same parties, just need to transfer the note. Can I do that with just a transfer of note or something simple like that? Do I need to reconvey??

 

From: wsbarp-bounces at lists.wsbarppt.com [mailto:wsbarp-bounces at lists.wsbarppt.com] On Behalf Of Michael Safren
Sent: Monday, October 24, 2016 10:43 AM
To: WSBA Real Property Listserv <wsbarp at lists.wsbarppt.com>
Subject: Re: [WSBARP] Excise Tax on D/T

 

Hi Scott:

 

Craig beat me to the response, but Excise Tax does not apply to a reconveyance because it is not a "Taxable Sale" under the Administrative Code.

 

See WAC 458-61A-102(17)(e) which lists examples of non-taxable transfers

"

(e) Examples. The following examples, while not exhaustive, illustrate some of the circumstances in which a transfer may or may not be taxable. These examples should be used only as a general guide. The status of each situation must be determined after a review of all of the facts and circumstances.

(i) John paid off his home mortgage and wants to get a loan to make improvements and buy a new car. John obtains an equity loan, secured by his home as collateral. This transaction is not subject to the real estate excise tax.

(ii) Bob purchased real property from Sam pursuant to a real estate contract. Real estate excise tax was paid on the purchase price at the time of the sale. Bob has now paid off the property, and Sam is issuing a fulfillment deed to Bob indicating that the real estate contract has been satisfied. The fulfillment deed from Sam to Bob is not subject to the real estate excise tax.

(iii) Diane has made the final payment on her mortgage, and the bank issues a full reconveyance of her property, indicating that the mortgage is paid in full. The reconveyance is not subject to the real estate excise tax."

 

 

Hope this helps. 

 

Kind regards,

Michael Safren

 

On Mon, Oct 24, 2016 at 8:35 AM, Scott Hildebrand <scott at starboard-strategies.com <mailto:scott at starboard-strategies.com> > wrote:

Colleagues:

 

PC is beneficiary of a D/T on property 1.

Grantor on property 1 wants to buy another property and PC would transfer encumbrance to property 2.

Property 1 would then be free and clear and could be sold. D/T would have to be reconveyed.

Can I accomplish this without paying excise tax, or, because there is a reconveyance, excise tax would have to be paid on property 1?

 

Thank you,

Scott Hildebrand

 

 


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