[WSBARP] Nominees; WAC 458-61A-214; Flyhomes

[Dwight Bickel]

The transaction model explained in prior posts can be done without a second excise tax due under the nominee excise exemption. Just ensure the documentation requirements of (5) are done with documentation dated before the initial purchase.

WAC 458-61A-214 (5) Acceptable documentation includes a notarized statement, dated on or before the date of the initial purchase, that the nominee acquired the property on behalf of the third party, or other documentation clearly demonstrating the requirements of subsection (3) of this section have been satisfied. Such documentation may include, but is not limited to, financial documentation evidencing the nominee/third-party relationship existed from the time of the original transfer, and confirming the source of the funds used to purchase the property.

Reply to the comparison posted by Kary Krismer:
A transaction where a relocation company acquires a deed from the owner with compensation to that owner, then acts to resell the property, does not comply with the nominee exception, for several reasons.

(3) Subsequent transfer. The later transfer of the property by the nominee to the third party purchaser is subject to real estate excise tax, unless each of the following requirements is met:
(a) The proper tax was paid on the initial purchase of the property by the nominee;
(b) The funds used by the nominee to acquire the property were provided by the third party;
(c) The third party legally existed at the time of the initial transaction; and
(d)(i) The subsequent transfer from the nominee to the third party is not for a greater consideration than that of the initial acquisition

Also in answer to the question about the purchaser's insurance against potential excise tax:
All title insurance policy forms issued to the purchaser will insure against the risk that there is unpaid excise tax, because that is a lien upon the real property, so unless it is shown as a special exception, or the insured purchaser has actual knowledge that a lien exists, their policy will protect against an assessment by DOR. Of course that would remain a debt due from the "seller" which would be Flyhomes for the second transfer.

Dwight A. Bickel
Real Property Title Advisor
Washington Title Professional
Dwight at DwightBickel.com<mailto:Dwight at DwightBickel.com>
https:/dwightbickel.com

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