[WSBARP] "Excise" versus "Transfer"

[Inger Brockman]

I do see how the distinction between "transfer tax" and our  "real estate excise tax" (for which an affidavit is required on all  transfers requiring either payment or proof of specific exemption) could be confusing.

See:   http://www.ncsl.org/research/fiscal-policy/real-estate-transfer-taxes.aspx#WA
which lists all states' transfer taxes, including our REET (albeit stating that it is an excise tax)

And see:  http://www.investopedia.com/terms/t/transfertax.asp
which states:  "Transfer tax is also known as "excise tax" in some states."

I'm not saying that "Investopedia" is legal precedent, but I do think there is room for debate here about what the buyer and seller intended, and those of us drafting (or reviewing) purchase agreements should not assume "transfer tax" is a category of closing costs will be deemed completely inapplicable in Washington (especially if it is not distinguished from and given separate treatment than the REET).

Inger C. Brockman |  Montgomery Purdue Blankinship & Austin PLLC
701 Fifth Avenue, Suite 5500, Seattle, WA 98104   (206) 682-7090   Fax: (206) 625-9534   brockman at mpba.com<mailto:brockman at mpba.com>   www.mpba.com<http://www.mpba.com/>
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From: wsbarp-bounces at lists.wsbarppt.com [mailto:wsbarp-bounces at lists.wsbarppt.com] On Behalf Of Bickel, Dwight
Sent: Thursday, May 25, 2017 1:09 PM
To: WSBA Real Property Listserv
Subject: Re: [WSBARP] "Excise" versus "Transfer"

It might help people understand if you called it by the correct name; it is a real estate sales tax. There should be no reasonable debate that it is a transfer tax.

If the buyer agrees in a real estate purchase and sale agreement to pay the real estate sales tax, the amount paid by the purchaser is additional consideration that must be added to the price that is also taxed.

Computing the extra tax on the increased taxable amount requires a bit of algebra [see, we really did need to learn it!]:
Initial Purchase Price / (1.00 - [local excise tax rate (.0228)]) = Adjusted Purchase Price subject to tax
Thus, a $250,000 price in an area with that tax rate, divided by .9772, results in an adjusted price of $255,832.99.

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