[WSBARP] Related party transaction - How much REET?

[Sarah McCarthy]

Please reply to list.

*Sarah O’Farrell McCarthy*


*(Pronouns: she / her)*Attorney | Kelly, Arndt & Walker, Attorneys at Law,
PLLP
P.O. Box 290 | 6443 Harding Avenue | Clinton, WA  98236

(Located on Whidbey Island, Island County, Washington)
Phone: (360) 341-1515 | Fax: (360) 341-3272
sarah at kawlawyers.com | www.kawlawyers.com


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On Tue, Sep 14, 2021 at 12:42 PM Nicholas Pleasants <nick at pleasantslaw.com>
wrote:

> Hi Listmates,
>
> Let’s say I have a probate where the parents are deceased, two children
> are inheriting 50/50, and only probate asset is a home worth $800,000 with
> a $400,000 mortgage. One child wants to buy out the other, assume the
> mortgage (if possible under Garn St Germain) or just refinance into their
> own name.
>
> My typical practice is to deed the property to the two kids by PR deed,
> then have a second transaction where one kid buys out the other. When I’ve
> done this in the past, I have not had to deal with the mortgage issue. In
> this example, the amount of consideration would be $200,000 (half the
> equity), so can we just pay tax on the $200,000 changing hands? Or does DOR
> tax the FMV 50% interest that is being transferred, worth $400,000? Or does
> DOR tax on $600,000 ($400,000 mortgage assumed + $200,000 consideration to
> sibling)?
>
> I don’t think I can do a non-pro rata distribution because there are no
> other probate assets. Thanks in advance for any thoughts.
>
> Best,
>
> Nick
>
>
>
> *Nicholas Pleasants*
>
> Owner
>
>
>
> *[image: (Logo) Pleasants Law Firm]* <http://www.pleasantslaw.com/>
>
>
>
> Pleasants Law Firm, P.S.
> 2300 130th Ave NE, Suite A-101
> Bellevue, WA 98005-1755
> (425) 615-7070 tel/fax
> nick at pleasantslaw.com
>
> www.pleasantslaw.com
>
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