[WSBARP] Excise Tax Question

[Kathleen Hopkins]

I am not a tax attorney so you want to do your own research to confirm, but consider if the nominee (aka strawman) exception WAC 458-61A-214 might work if A uses C's money to buy out B's interest.
NOTE: under subpart (5) of the WAC you will be required to obtain a notarized statement from C, dated BEFORE the date of the transfer from B to A, stating that A is using C's money to acquire the TIC interest on C's behalf.


Kathleen J. Hopkins
Real Property Law Group, PLLC
1326 Fifth Avenue, Suite 654
Seattle, WA 98101
Phone & Fax: (206) 625-0404
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email: khopkins at rp-lawgroup.com<mailto:khopkins at rp-lawgroup.com>
www.rp-lawgroup.com<http://www.rp-lawgroup.com/>

*Licensed in Washington State.



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From: wsbarp-bounces at lists.wsbarppt.com <wsbarp-bounces at lists.wsbarppt.com> On Behalf Of Umar Gebril
Sent: Friday, January 14, 2022 12:18 PM
To: WSBA Real Property Listserv <wsbarp at lists.wsbarppt.com>
Subject: Re: [WSBARP] Excise Tax Question

No debt on the property.

Umar Gebril | Attorney | Partner
Cascade Law, PLLC
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From: "wsbarp-bounces at lists.wsbarppt.com<mailto:wsbarp-bounces at lists.wsbarppt.com>" <wsbarp-bounces at lists.wsbarppt.com<mailto:wsbarp-bounces at lists.wsbarppt.com>> on behalf of John McCrady <j.mccrady at pstitle.com<mailto:j.mccrady at pstitle.com>>
Reply-To: WSBA Real Property Listserv <wsbarp at lists.wsbarppt.com<mailto:wsbarp at lists.wsbarppt.com>>
Date: Friday, January 14, 2022 at 12:14 PM
To: WSBA Real Property Listserv <wsbarp at lists.wsbarppt.com<mailto:wsbarp at lists.wsbarppt.com>>
Subject: Re: [WSBARP] Excise Tax Question

If there is debt on the property, and C is taking on part of the debt, then excise tax is owing on any consideration C is paying to B, and also on ½ the amount of debt owing.

John McCrady
Counsel
Puget Sound Title Company
5350 Orchard Street West
University Place WA 98467
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j.mccrady at pstitle.com<mailto:j.mccrady at pstitle.com>
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From: wsbarp-bounces at lists.wsbarppt.com<mailto:wsbarp-bounces at lists.wsbarppt.com> <wsbarp-bounces at lists.wsbarppt.com<mailto:wsbarp-bounces at lists.wsbarppt.com>> On Behalf Of Umar Gebril
Sent: Friday, January 14, 2022 11:32 AM
To: WSBA Real Property Listserv <wsbarp at lists.wsbarppt.com<mailto:wsbarp at lists.wsbarppt.com>>
Subject: [WSBARP] Excise Tax Question

Listmates,

Here's a scenario I'd be interested in getting your opinions on:

A and B are both unmarried and currently own Property in joint tenancy WROS.

A wants to remove B from title, and then add C to title and own Property together as TIC. B is amenable to being bought out, and has agreed to sell her interest in the Property back to A for $350k. B does not know that C exists and B is not aware that A intends to add C to title after B is removed.

My initial thought is to first utilize a QCD to break the joint tenancy and remove B from title (thereby triggering excise tax liability on the part of B for the transfer in interest), and then subsequently completing a 2nd deed (QCD, WD...?) in order to add C to title.

However, by proceeding this way, I believe that in executing the 2nd deed (from A to C, as TIC), A will incur excise tax - which we want to avoid.

Aside from having B transfer her interest directly to C (and thereby finding out about C's existence), can you think of another way or means that would allow us to complete this without having A incur excise tax?

Thoughts and comments appreciated.

Umar

Umar Gebril | Attorney | Partner
Cascade Law, PLLC
www.cascade-law.com<https://f.xdref.com/?id=20EJddVK026247&from=wsbarp-bounces@lists.wsbarppt.com&to=j.mccrady@pstitle.com&url=http://www.cascade-law.com>
1604 Hewitt Ave, Suite 515
Everett, WA 98201
425.300.5616

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