<div dir="ltr">And now, the contra position.... ;-)<div><br></div><div>It is my understanding that the DOR takes a very broad view of the issue. If they audit the transaction, they will ask for proof that all payments on the debt were made by Borrower. If in that audit the DOR learns that Ex in fact paid one half of all payments, I am afraid it will conclude that Ex was de facto liable for half the debt. So relieving Ex of that debt is subject to the excise tax.</div><div><br></div><div>Furthermore, I don't see any "gift" here. So I don't think the Supp Statement is appropriate.</div><div><br></div><div>I think the answer is found in WAC 458-61A-204 regarding TICs:</div><div>(5) The sale of an interest in real property from one or more joint tenants or tenants in common to remaining tenants or to a third party is a taxable transaction. The taxable amount of the sale is the total of the following:<br></div><div>(a) Any consideration given; and<br>(b) Any consideration promised to be given, including the amount of any debt remaining unpaid on the property at the time of sale multiplied by that fraction of interest in the real property being sold.<br></div><div><br></div><div>The regulation does not differentiate liability vs. non-liability on the existing debt. So unfortunately I think excise tax is due on one half the existing debt, as well as the cash paid for the equity. If that amount is less than one half the assessed value (the presumed "gross selling price") then the difference is the amount that is exempt from the tax.</div><div><br></div><div>I hope all of you are enjoying the Holidays!!!</div><div><br></div><div>Craig</div><div><div dir="ltr" class="gmail_signature" data-smartmail="gmail_signature"><div dir="ltr"><div dir="ltr"><div dir="ltr"><div dir="ltr"><div dir="ltr"><div dir="ltr"><div dir="ltr"><div dir="ltr"><div dir="ltr"><div dir="ltr"><div dir="ltr"><div dir="ltr"><div dir="ltr"><div dir="ltr"><div dir="ltr"><div dir="ltr"><div dir="ltr"><div dir="ltr"><div dir="ltr"><div dir="ltr"><div dir="ltr"><div dir="ltr"><div dir="ltr"><div dir="ltr"><div dir="ltr"><div dir="ltr"><div dir="ltr"><div dir="ltr"><div dir="ltr"><div dir="ltr"><div dir="ltr"><div dir="ltr"><div dir="ltr"><div dir="ltr"><div style="font-size:12.8px">Craig Blackmon, <a href="https://www.mywsba.org/PersonifyEbusiness/LegalDirectory/LegalProfile.aspx?Usr_ID=000000029240" target="_blank">Attorney at Law</a></div><div style="font-size:12.8px"><span style="color:rgb(33,33,33)"><font face="arial, helvetica, sans-serif" size="2">92 Lenora St. #103, </font></span><span style="font-family:arial,helvetica,sans-serif;font-size:small;color:rgb(33,33,33)">Seattle WA 98121 </span></div><div style="font-size:12.8px"><span style="color:rgb(33,33,33)"><font face="arial, helvetica, sans-serif" size="2">Office/Cell: (206) 369-5949</font></span> </div><div style="font-size:12.8px">On the blog: <a href="https://www.fsbolawyers.org/blog/tenants-in-common-agreement" target="_blank">Co-Ownership of Real Property by Single People</a></div><div style="font-size:12.8px"><a href="https://seattlepropertylawyer.com/" target="_blank"><img style="font-size:small" width="96" height="60" src="https://ci3.googleusercontent.com/mail-sig/AIorK4yAS3LbigaeQ7XjeX_jBFLC1xkGA4lhF3hRITg40apDzIx3WWSC-yKZowxra-M6dhcfA8lC3xQ"></a> <a href="https://www.fsbolawyers.org/" target="_blank"><img width="96" height="92" src="https://ci3.googleusercontent.com/mail-sig/AIorK4wb7RP8yX-nieDebz-qxj-lDuz4U1vb4JaUimepQmmYEjbAHyaH1ZbnST10vrkMatVaysevEMU"></a></div><div style="font-size:12.8px">CONFIDENTIALITY NOTICE: This communication is a private, confidential electronic communication encompassed by 18 USC 2510. It is for the sole use of the intended recipient and receipt by anyone other than the intended recipient does not constitute a loss of its confidential or privileged nature. Any review or distribution by others is strictly prohibited. If you are not the intended recipient please inform the sender and destroy all copies.<br></div><div style="font-size:12.8px"><div style="margin:8px 0px 0px;padding:0px;font-family:Roboto,RobotoDraft,Helvetica,Arial,sans-serif"><div><div></div></div></div><div style="font-family:Roboto,RobotoDraft,Helvetica,Arial,sans-serif"></div></div></div></div></div></div></div></div></div></div></div></div></div></div></div></div></div></div></div></div></div></div></div></div></div></div></div></div></div></div></div></div></div></div></div></div></div></div><br></div><br><div class="gmail_quote"><div dir="ltr" class="gmail_attr">On Wed, Dec 28, 2022 at 2:39 PM Mark Anderson <<a href="mailto:marka@mbaesq.com">marka@mbaesq.com</a>> wrote:<br></div><blockquote class="gmail_quote" style="margin:0px 0px 0px 0.8ex;border-left:1px solid rgb(204,204,204);padding-left:1ex"><div class="msg-6574338393951450687">
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<p class="MsoNormal"><span style="font-size:10pt;font-family:Arial,sans-serif;color:rgb(0,32,96)">Just some thoughts on this – please don’t judge me too harshly. (insert smiley face).<u></u><u></u></span></p>
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<p class="MsoNormal"><span style="font-size:10pt;font-family:Arial,sans-serif;color:rgb(0,32,96)">I suppose you could characterize at least part (if not all) of the payment from the Borrower to the Ex as a repayment of the amounts that Ex has transferred to
Borrower over the years. You say there is nothing in writing that ever created an indebtedness between Borrower and Ex. On its face, then, this just looks like "moving money around" between Borrower and Ex (especially if they ever had a joint bank account
and they are just splitting up joint assets). If this amount (the "Repayment”) is less than 50% of the equity, the amount of the Repayment could be characterized as a gift and the difference between the Repayment and 50% of the equity would be the amount
that is subject to excise tax.<u></u><u></u></span></p>
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<p class="MsoNormal"><span style="font-size:10pt;font-family:Arial,sans-serif;color:rgb(0,32,96)">In my opinion, because Ex did not become indebted on the note, there is no debt to be relieved of. Thus, there would be no excise tax due on any debt transferred.
Although none of the checkboxes on the Real Estate Excise Tax Supplemental Statement appear to be on point, the one that is the closest is A.2. It would read
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<p class="MsoNormal"><span style="font-size:10pt;font-family:Arial,sans-serif;color:rgb(0,32,96)"><u></u> <u></u></span></p>
<p class="MsoNormal" style="margin-left:0.5in"><span style="font-size:10pt;font-family:Arial,sans-serif;color:rgb(0,32,96)">"Grantee (buyer) will make payments on
<u>0%</u> of total debt of <u>$0.00</u> for which grantor (seller) is liable and pay grantor (seller) ($______ )."<u></u><u></u></span></p>
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<p class="MsoNormal" style="margin-bottom:12pt"><b><span style="font-size:10pt;font-family:Arial,sans-serif;color:rgb(34,42,53)">Mark B. Anderson<br>
</span></b><span style="font-size:10pt;font-family:Arial,sans-serif;color:rgb(34,42,53)">ANDERSON LAW FIRM PLLC<br>
821 Dock St Ste 209 PMB 4-12<br>
Tacoma, Washington 98402<br>
+1 253-327-1750<br>
+1 253-327-1751 (fax)<br>
<a href="mailto:marka@mbaesq.com" target="_blank"><span style="color:blue">marka@mbaesq.com</span></a><br>
<a href="http://www.mbaesq.com/" target="_blank"><span style="color:blue">www.mbaesq.com</span></a><b><u></u><u></u></b></span></p>
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<p class="MsoNormal"><b>From:</b> <a href="mailto:wsbarp-bounces@lists.wsbarppt.com" target="_blank">wsbarp-bounces@lists.wsbarppt.com</a> <<a href="mailto:wsbarp-bounces@lists.wsbarppt.com" target="_blank">wsbarp-bounces@lists.wsbarppt.com</a>>
<b>On Behalf Of </b><a href="mailto:samuel@meylerlegal.com" target="_blank">samuel@meylerlegal.com</a><br>
<b>Sent:</b> 12/27/2022 3:47 PM<br>
<b>To:</b> 'WSBA Real Property Listserv' <<a href="mailto:wsbarp@lists.wsbarppt.com" target="_blank">wsbarp@lists.wsbarppt.com</a>>; <a href="mailto:wsbapt@lists.wsbarppt.com" target="_blank">wsbapt@lists.wsbarppt.com</a><br>
<b>Subject:</b> [WSBARP] REET Question/Exemption<u></u><u></u></p>
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<p class="MsoNormal"><u></u> <u></u></p>
<p class="MsoNormal">Listmates,<u></u><u></u></p>
<p class="MsoNormal"><u></u> <u></u></p>
<p class="MsoNormal">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.
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<p class="MsoNormal"><u></u> <u></u></p>
<p class="MsoNormal">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.
<u></u><u></u></p>
<p class="MsoNormal"><u></u> <u></u></p>
<p class="MsoNormal">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.<u></u><u></u></p>
<p class="MsoNormal"><u></u> <u></u></p>
<p class="MsoNormal">Sam<u></u><u></u></p>
<p class="MsoNormal"><u></u> <u></u></p>
<p class="MsoNormal"><b><span style="font-size:10pt;font-family:Arial,sans-serif;color:blue"><u></u> <u></u></span></b></p>
<p class="MsoNormal"><b><span style="font-size:10pt;font-family:Arial,sans-serif;color:blue">Samuel M. Meyler</span></b><u></u><u></u></p>
<p class="MsoNormal"><b><span style="font-size:10pt;font-family:Arial,sans-serif;color:blue">Meyler Legal, PLLC </span></b><u></u><u></u></p>
<p class="MsoNormal"><span style="font-size:10pt;font-family:Arial,sans-serif;color:blue">1700 Westlake Ave. N., Ste. 200<u></u><u></u></span></p>
<p class="MsoNormal"><span style="font-size:10pt;font-family:Arial,sans-serif;color:blue">Seattle, Washington 98109</span><u></u><u></u></p>
<p class="MsoNormal"><b><span style="font-size:10pt;font-family:Arial,sans-serif;color:blue">Tel:</span></b><span style="font-size:10pt;font-family:Arial,sans-serif;color:blue"> 206.876.7770<u></u><u></u></span></p>
<p class="MsoNormal"><b><span style="font-size:10pt;font-family:Arial,sans-serif;color:blue">Fax:</span></b><span style="font-size:10pt;font-family:Arial,sans-serif;color:blue"> 206.876.7771<u></u><u></u></span></p>
<p class="MsoNormal"><b><span style="font-size:10pt;font-family:Arial,sans-serif;color:blue">Email:</span></b><span style="font-size:10pt;font-family:Arial,sans-serif;color:blue"> </span><a href="mailto:samuel@meylerlegal.com" target="_blank"><span style="font-size:10pt;font-family:Arial,sans-serif;color:blue">samuel@meylerlegal.com</span></a><u></u><u></u></p>
<p class="MsoNormal"><span style="font-size:10pt;font-family:Arial,sans-serif;color:blue"> </span><u></u><u></u></p>
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