[WSBARP] Excise Tax Question

[Doris Eslinger]

Parents and Child bought real estate in 2006 as tenants in common.  Parents
and Child were on deed of trust and all three paid mortgage equally.  The
house was a rental until 2011 when Parents moved into the house and
refinanced the loan in their names only. Parents are the only ones paying
mortgage since 2011.  During the 2011 refinancing, Child wanted to exit
title but escrow agent advised them to leave the deed alone because it would
be expensive.  Because Parents have two children and is doing estate
planning, Parents prefer Child exit title now and Child wants to quit claim
her interest to parents, there's a 90K mortgage balance on it now and no
consideration will change hands (except Parents will continue to pay
mortgage). The balance at the time of 2011 refinancing was $100K.  Parents
do not mind pay excise tax.  Is the excise tax 1/3 of $90K (today's mortgage
balance).   Could DOR assert that the 2011 refinancing was a sale that
should have triggered excise tax?  I don't think so because Child's name was
on title then.  Parents do not mind paying excise tax from the time of
refinancing, plus interest.  Parents really don't want to get audited and
have to deal with the audit.  I may be over thinking this and appreciate any
insights. Thank you!

 

Regards, 

Doris Eslinger
Attorney at Law
Eslinger Law Office, PLLC 
2200 112th Ave NE | Suite 200 | Bellevue, WA 98005 | Phone: (425) 451-3237 |

Fax: (425) 633-2468 |  <mailto:doris at eslingerlawoffice.com>
doris at eslingerlawoffice.com |  <http://www.eslingerlawoffice.com/>
eslingerlawoffice.com  

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