[WSBARP] REET Question/Exemption

[samuel at meylerlegal.com]

Listmates,

 

Co-habitants go on title of property together but only one of them
("Borrower") is liable on the note due to the lender.  Borrower makes
payments on the loan directly while the other co-habitant ("Ex") makes
payments to the Borrower for half of the loan payment.  There is nothing in
writing expressly stating that Ex is indebted to Borrower for 50% of the
mortgage payment, but that is essentially what Ex pays to borrower for
several years.  

 

Borrower and Ex call it quits and wish to remove Ex from title.  There is
some equity in the property now.  Borrower is willing to pay Ex 50% of the
equity value and excise tax would be due on that amount.  I am questioning
whether excise tax should also be due on 50% of the underlying debt given
that the Ex was never personally liable on the note due to the bank.  It
could appear to someone as though Ex was liable to Borrower for half the
mortgage and has now been relieved of that liability.  

 

Have you dealt with this before?  Would excise tax only be due on the value
of the equity that Borrower pays Ex for?  What exemptions apply?  Thanks for
the input.

 

Sam

 

 

Samuel M. Meyler

Meyler Legal, PLLC 

1700 Westlake Ave. N., Ste. 200

Seattle, Washington 98109

Tel:  206.876.7770

Fax:  206.876.7771

Email:   <mailto:samuel at meylerlegal.com> samuel at meylerlegal.com

  

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