[WSBARP] REET Exemption for Parents to Son

[Mark Anderson]

Use a quitclaim deed.  If the son is not on title already, WAC 458-61A-201(1) would apply.  If the debt is paid off, posit it as a 100% gift.  If it is a gift and any debt is being assumed by the son, then excise tax would only be due on the debt assumed (the consideration).  Be sure to prepare a Real Estate Excise Tax Supplemental Statement (thank you, John McCrady) and annotate the REETA with the appropriate section of the Supplemental Statement (for example, for a 100% gift without consideration, it would be 2.B.1.).

On the other hand, if son was on title along with his parents, I would still use a quitclaim deed, but exempt the transaction using WAC 458-61A-215(1).

Mark B. Anderson
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From: wsbarp-bounces at lists.wsbarppt.com <wsbarp-bounces at lists.wsbarppt.com> On Behalf Of Nicholas Pleasants
Sent: Tuesday, August 31, 2021 4:02 PM
To: WSBA Real Property Listserv <wsbarp at lists.wsbarppt.com>
Subject: [WSBARP] REET Exemption for Parents to Son

Hi All,
Looking for a suggestion on how to structure a potential transaction. Parents want to transfer home to Son. The home equitably belongs to Son – he has paid the mortgage (and probably also the downpayment) since it was acquired from a third party years ago. At the time home was purchased by Parents, Son was going through a divorce, and to avoid muddying up the title with soon-to-be-ex-wife’s potential interest, Son asked Parents to purchase the home and take out mortgage for him (I know, a bit weird). I think the mortgage does not need to be refinanced because of Garn St. Germain. So my main concern is how to structure the transaction to  be exempt from excise tax. Can parents quitclaim to son? What WAC would apply? Thanks for any input or steerage in the right direction.
Best,
Nick

Nicholas Pleasants
Owner

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