[WSBARP] Real Estate Excise Tax Question

[Eric Nelsen]

I've gone around and around on that issue myself. With joint and several liability, I think the "relief" to transferor offered by the assumption could be considered to be (A) zero, because the transferor remains wholly liable for the entire debt under the contract with the lender, or (B) the full amount of the debt, because the transferee has agreed to pay the whole thing and the transferor was technically liable for the whole thing, or (C) half the amount, because as between two joint debtors, if one pays more than half they'd have a right to sue the other for contribution. Since neither (A) nor (B) make much sense for taxation purposes, I've always gone with (C). And (knock wood) I ain't been audited yet.
Sincerely,

Eric

Eric C. Nelsen
Sayre Law Offices, PLLC
1417 31st Ave South
Seattle WA 98144-3909
206-625-0092
eric at sayrelawoffices.com<mailto:eric at sayrelawoffices.com>

From: wsbarp-bounces at lists.wsbarppt.com <wsbarp-bounces at lists.wsbarppt.com> On Behalf Of Mark Anderson
Sent: Thursday, September 7, 2023 3:29 PM
To: WSBA Real Property Listserv <wsbarp at lists.wsbarppt.com>
Subject: Re: [WSBARP] Real Estate Excise Tax Question

I knew that the relief from debt would be a part of the consideration.  Given that they were jointly liable for the debt (i.e., each liable for 100% of the debt), however, I suppose I was looking for confirmation that the appropriate amount of the consideration would be one half of the debt and not 100%.  Although neither of the WACs that you cite seem to address that on point, your message confirmed my desired conclusion - thanks, Eric!
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/>
CONFIDENTIALITY NOTICE
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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 Eric Nelsen
Sent: 09/07/2023 3:13 PM
To: WSBA Real Property Listserv <wsbarp at lists.wsbarppt.com<mailto:wsbarp at lists.wsbarppt.com>>
Subject: Re: [WSBARP] Real Estate Excise Tax Question

Relief from debt is part of the consideration. If they're jointly liable, then him taking over the loan is consideration equal to half the mortgage balance. See WAC 458-61A-103<https://app.leg.wa.gov/WAC/default.aspx?cite=458-61A-103>, WAC 458-61A-102(3)(b)<https://app.leg.wa.gov/WAC/default.aspx?cite=458-61A-102>. So in your scenario, REET has to be paid on the cash transfer (half the equity) plus half the debt.
Re other stumbling blocks, there might be some, but this is how I've handled such situations before and I haven't found a better way to do it. Just need to factor in the cost of the transfer into settlement negotiations.
Sincerely,

Eric

Eric C. Nelsen
Sayre Law Offices, PLLC
1417 31st Ave South
Seattle WA 98144-3909
206-625-0092
eric at sayrelawoffices.com<mailto:eric at sayrelawoffices.com>

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 Mark Anderson
Sent: Thursday, September 7, 2023 2:47 PM
To: WSBA Real Property Listserv <wsbarp at lists.wsbarppt.com<mailto:wsbarp at lists.wsbarppt.com>>
Subject: [WSBARP] Real Estate Excise Tax Question

M and W, an unmarried couple, purchased a home in 2021.  They both signed a promissory note and deed of trust.  M and W are now breaking up and M wants to buy out W's interest in the property.  M and W have agreed that, in exchange for a quitclaim deed from W, M will fully assume the existing loan and pay half the equity in the property to W.
For the purposes of the real estate excise tax, how is the gross selling price calculated?
Do any of you know of any additional stumbling blocks in making this transaction work?
Thanks.
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/>
CONFIDENTIALITY NOTICE
This transmission is confidential and is intended solely for the use of the individual named recipient. It may be protected by the attorney-client privilege, work product doctrine, or other confidentiality protection. If you are not the intended recipient, or the person responsible to deliver it to the intended recipient, be advised that any dissemination, distribution, or copying of this communication is prohibited. If you have received this transmission in error, please immediately notify the sender via e-mail or by telephone at (253) 327-1750 that you have received the message in error, and then delete it. Thank you.

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