[WSBARP] REET on transfer of leasehold improvements?

[Mark Anderson]

I am wrapping up one of these now.  The only real estate excise tax due on this transaction would likely be on the value of any improvements that the client built on the property and actually owned.  Otherwise, the definition of "sale" under RCW 82.45.010 does not appear to include a lease such as the one being transferred here.  If the buildings already existed, I think your client is exempt from paying any real estate excise tax on the value of those buildings.

Mark B. Anderson
ANDERSON LAW FIRM PLLC
821 Dock St  Ste 209  PMB 4-12
Tacoma, Washington 98402
+1 253-327-1750
+1 253-327-1751 (fax)
marka at mbaesq.com<mailto:marka at mbaesq.com>
www.mbaesq.com<http://www.mbaesq.com/>
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From: wsbarp-bounces at lists.wsbarppt.com <wsbarp-bounces at lists.wsbarppt.com> On Behalf Of Joshua Grant
Sent: 02/09/2023 5:44 PM
To: wsbarp at lists.wsbarppt.com
Subject: [WSBARP] REET on transfer of leasehold improvements?

My client sold his business, including improvements etc. which he only has a leasehold interest in.  Total sale was $650,000.  The parties didn't allocate anything to real estate.. only equipment and that was $150,000.  (I didn't assist with this closing).  The buildings are on U.S. Bureau Of Reclamation  ground on Banks Lake. The county had a value on buildings at $157,620. The County Treasurer somehow hears about it and tells client he owes REET.  This is my client's statement:
Josh
Spoke in person to XXXXX,Treasurer, in Court House.
He had given me the TeraScan T2 Doc.[which shows a value on some buildings and camp sites at $157,600]
He indicated that paying on the 157,620 would help to NOT get audited by Dept of Revenue.
Also gave me a blank "REAL ESTATE CONTRACT" to record with REET.affid.
So aside from practicing law without a license, my client has been encouraged to sign a RE contract with his purchaser, to commit him to sell real estate he doesn't own, and record it and of course pay on a dreamt up RE value that the County came up with.  Again the agreed upon allocation is only $120,000 and that is on all equipment which includes boats and outboard motors etc. beyond the RE improvements. For the reason that it would help him avoid being audited??!!
I tried to see on line at department of revenue a discussion/form on REET on sale of leaseholds.. without success.
Has anyone run into this before?

Josh


Joshua F. Grant
[cid:image001.png at 01D93D50.1AE60320]
P. O. Box 619
Wilbur, WA 99185
509 647 5578
jgrant at advocateslg.com<mailto:jgrant at advocateslg.com>

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