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Thank you Mr. Bickel - a much needed change. <br>
<br>
KGL<br>
<br>
<div class="moz-cite-prefix">On 12/18/2015 05:53 PM, Bickel, Dwight
wrote:<br>
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<div class="WordSection1">
<p class="MsoNormal">This message to the Washington real
property, probate and trust lawyers is to solicit feedback
related to a proposed statutory change. I act as the Co-Chair
of the Legislative Committee of the Washington Land Title
Association [WLTA].<o:p></o:p></p>
<p class="MsoNormal"><o:p> </o:p></p>
<p class="MsoNormal">WLTA members propose a statutory amendment
that will terminate the burden to pay real estate excise tax
[REET] upon transfers of ownership of real property that occur
by operation of law due to Wills, trusts, divorces, court
decisions, mergers, etc.<o:p></o:p></p>
<p class="MsoNormal"><o:p> </o:p></p>
<p class="MsoNormal">WA law has not been changed to require such
transfers to pay REET. The law remains that only sales of real
property require payment of REET. There are many changes in
ownership that occur by operation of law that are not taxable
as sales. Such transfers often require no deed of conveyance
or recordation.<o:p></o:p></p>
<p class="MsoNormal"><o:p> </o:p></p>
<p class="MsoNormal">Transfers that occur pursuant to devise
made by a Will are not taxable. Transfers that occur due to
the death of an owner pursuant to the legal effect of
intestate succession, community property, joint tenancy, life
estates and transfer on death deeds are not taxable. These
changes in ownership are not required to pay REET, even if
there is no probate or court proceeding.
<i>See</i> <span class="breadcrumbclass"><a
moz-do-not-send="true"
href="http://apps.leg.wa.gov/rcw/default.aspx?cite=82.45.010">RCW
82.45.010</a></span>(3).
<o:p></o:p></p>
<p class="MsoNormal"><o:p> </o:p></p>
<p class="MsoNormal">Transfers of ownership that are
accomplished pursuant to court orders, such as partition,
divorce, condemnation and quiet title, are not taxable.
Changes in title to real property that occur by changes in the
owner entity that are not sales are not taxable, also as
provided by the cited statute.<o:p></o:p></p>
<p class="MsoNormal"><o:p> </o:p></p>
<p class="MsoNormal">In 2008 the Legislature enacted a new
statute, now known as <a moz-do-not-send="true"
href="http://app.leg.wa.gov/RCW/default.aspx?cite=82.45.197">
RCW 82.45.197</a>. <i>See</i> SSB 6851 and <a
moz-do-not-send="true"
href="http://leg.wa.gov/codereviser/documents/sessionlaw/2008pam2.pdf">
Chapter 269, Session Laws of 2008</a>. It provided the
documentation to be provided to the County Treasurer to claim
exemption from REET when the parties wanted to record a
conveyance pursuant to inheritance. It begins:
<o:p></o:p></p>
<p class="MsoNormal"><o:p> </o:p></p>
<p class="MsoNormal"
style="mso-margin-top-alt:0in;margin-right:.5in;margin-bottom:0in;margin-left:.5in;margin-bottom:.0001pt"><span
style="font-size:10.0pt;font-family:"Arial","sans-serif"">In
order to receive an exemption from the tax in this chapter
on real property transferred as a result of inheritance
under RCW 82.45.010(3)(a), the following documentation must
be provided:<o:p></o:p></span></p>
<p class="MsoNormal"><span
style="font-family:"Verdana","sans-serif""><o:p> </o:p></span></p>
<p class="MsoNormal"><i>See also</i> <a moz-do-not-send="true"
href="http://apps.leg.wa.gov/wac/default.aspx?cite=458-61A-202">
WAC 458-61A-202</a> related to the exemption from REET for
inheritance transfers, that states, “<span
style="font-size:10.0pt;font-family:"Arial","sans-serif"">Transfers
of real property by inheritance or devise are not subject to
the real estate excise tax.</span>”<o:p></o:p></p>
<p class="MsoNormal"><o:p> </o:p></p>
<p class="MsoNormal">At some point about four years ago a couple
County Treasurers [Grant, Skagit & Yakima] began
interpreting RCW 82.45.197 as authority to require heirs who
receive title by inheritance to pay REET if they did not have
proper documentation. The position taken was that a probate
was required to avoid REET. This affected only a few people
because most intestate and non-probate heirs were not
recording documents and not filing excise tax affidavits.<o:p></o:p></p>
<p class="MsoNormal"><o:p> </o:p></p>
<p class="MsoNormal">However, due to changes made by the
Department of Revenue to its Regulations related to REET, all
transfers by operation of law are now required to file an
excise tax affidavit. Previously, the Regulations required an
excise tax affidavit and specified the documentation that was
required to claim exemption from REET for transfers by
operation of law
<i>only when conveyance documents were recorded</i>.<o:p></o:p></p>
<p class="MsoNormal"><o:p> </o:p></p>
<p class="MsoNormal">A change was made February 28, 2014 to WAC
<a moz-do-not-send="true"
href="http://apps.leg.wa.gov/wac/default.aspx?cite=458-61A&full=true#458-61A-303">458-61A-303</a>
[the regulation that explains when a real estate excise
affidavit is required]. It was not made due to a change in the
substantive law.
<o:p></o:p></p>
<p class="MsoNormal"><o:p> </o:p></p>
<p class="MsoNormal" style="margin-left:.5in"><span
style="font-size:10.0pt;font-family:"Arial","sans-serif"">WAC
458-61A-303 Affidavit. (1) Introduction. This section
explains<o:p></o:p></span></p>
<p class="MsoNormal" style="margin-left:.5in"><span
style="font-size:10.0pt;font-family:"Arial","sans-serif"">when
a real estate excise tax affidavit is required for the<o:p></o:p></span></p>
<p class="MsoNormal" style="margin-left:.5in"><span
style="font-size:10.0pt;font-family:"Arial","sans-serif"">((<s>conveyance</s>))
<u>transfer</u> of ((<s>an interest in</s>)) real property.
See WAC<o:p></o:p></span></p>
<p class="MsoNormal" style="margin-left:.5in"><span
style="font-size:10.0pt;font-family:"Arial","sans-serif"">458-61A-101
for procedures pertaining to transfers and acquisitions of<o:p></o:p></span></p>
<p class="MsoNormal" style="margin-left:.5in"><span
style="font-size:10.0pt;font-family:"Arial","sans-serif"">a
controlling interest in an entity owning real property in
the state<o:p></o:p></span></p>
<p class="MsoNormal" style="margin-left:.5in"><span
style="font-size:10.0pt;font-family:"Arial","sans-serif"">of
Washington. (2) Affidavit required. In general, an affidavit
must be filed<o:p></o:p></span></p>
<p class="MsoNormal" style="margin-left:.5in"><span
style="font-size:10.0pt;font-family:"Arial","sans-serif"">when
ownership or title to real property transfers as evidenced
by<o:p></o:p></span></p>
<p class="MsoNormal" style="margin-left:.5in"><span
style="font-size:10.0pt;font-family:"Arial","sans-serif"">conveyance,
deed, grant, assignment, quitclaim,
<u><span style="background:yellow;mso-highlight:yellow">or
any other document<o:p></o:p></span></u></span></p>
<p class="MsoNormal" style="margin-left:.5in"><u><span
style="font-size:10.0pt;font-family:"Arial","sans-serif";background:yellow;mso-highlight:yellow">effectuating
the transfer</span></u><span
style="font-size:10.0pt;font-family:"Arial","sans-serif"">
including, but not limited to, the following:<o:p></o:p></span></p>
<p class="MsoNormal" style="margin-left:.5in"><span
style="font-size:10.0pt;font-family:"Arial","sans-serif";background:yellow;mso-highlight:yellow">(b)
((<s>Conveyance</s>))
<u>Transfer</u> resulting from a court order;<o:p></o:p></span></p>
<p class="MsoNormal" style="margin-left:.5in"><span
style="font-size:10.0pt;font-family:"Arial","sans-serif";background:yellow;mso-highlight:yellow">(g)
((<s>Conveyance</s>))
<u>Transfer</u> to an heir in the settlement of an<o:p></o:p></span></p>
<p class="MsoNormal" style="margin-left:.5in"><span
style="font-size:10.0pt;font-family:"Arial","sans-serif";background:yellow;mso-highlight:yellow">estate;</span><span
style="font-size:10.0pt;font-family:"Arial","sans-serif"">
<o:p></o:p></span></p>
<p class="MsoNormal"><span
style="font-family:"Verdana","sans-serif""><o:p> </o:p></span></p>
<p class="MsoNormal">In the past two years, increasing number of
County Treasurers are actively enforcing the payment of REET
for inheritance transfers. When heirs sell the property, the
Treasurers are requiring excise tax affidavits related to the
prior change of ownership, regardless of the amount of time.
If the documentation isn’t perfect, the heirs as sellers must
pay REET and penalties before the intended sale may be
recorded.
<o:p></o:p></p>
<p class="MsoNormal"><br>
The protests of these people are increasing, in part because
Snohomish County, a more populous county, has begun to tax the
higher volume of such prior transfers.<o:p></o:p></p>
<p class="MsoNormal"><br>
The WLTA proposes to amend RCW 82.24.197 to expand the
potential documentation that will satisfy their right to claim
exemption from REET. At the same time, WLTA seeks to clarify
that all transfers by operation of law do not require excise
tax affidavits and recordation of affidavits in order to avoid
REET.<o:p></o:p></p>
<p class="MsoNormal"><o:p> </o:p></p>
<p class="MsoNormal">If you have comments or questions, or if
you are interested to contribute to the legislative process,
please contact me or the representatives of the RPP&T
Section.<o:p></o:p></p>
<p class="MsoNormal"><b><o:p> </o:p></b></p>
<div>
<p class="MsoNormal"><b><span
style="font-size:10.0pt;font-family:"Verdana","sans-serif";color:#002060">Dwight
A. Bickel</span></b><b><span
style="font-size:10.0pt;font-family:"Verdana","sans-serif";color:#002060"><o:p></o:p></span></b></p>
<p class="MsoNormal"><span
style="font-size:10.0pt;font-family:"Verdana","sans-serif";color:#002060">Legislative
Committee Co-Chair</span><span
style="font-size:10.0pt;font-family:"Verdana","sans-serif";color:#002060"><o:p></o:p></span></p>
<p class="MsoNormal"><span
style="font-size:10.0pt;font-family:"Verdana","sans-serif";color:#002060">Washington
Land Title Ass'n<o:p></o:p></span></p>
<p class="MsoNormal"><span
style="font-size:10.0pt;font-family:"Verdana","sans-serif";color:gray">701
- 5th Avenue, Suite 2300<br>
Seattle, WA 98104<br>
Phone: (206) 370-3189</span><span
style="font-size:10.0pt;font-family:"Verdana","sans-serif";color:navy"><o:p></o:p></span></p>
<p class="MsoNormal"><span
style="font-size:10.0pt;font-family:"Verdana","sans-serif";color:gray">E-mail:
</span><span style="color:#002060"><a moz-do-not-send="true"
href="blocked::mailto:Dwight.Bickel@fntg.com"><span
style="font-size:10.0pt;font-family:"Verdana","sans-serif";color:gray">Dwight.Bickel@fntg.com</span></a></span><span
style="font-size:10.0pt;font-family:"Verdana","sans-serif";color:gray"><o:p></o:p></span></p>
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