The Washington State Legislature justmade changes to the Real Estate Excise Tax (REET). Previously, the State collected 1.28% of the sale price of real property that funds several initiatives in the State, with the majority of the money going to the States’ General Fund. King County also collects 0.50% on the transfer of real property.
The new legislation is a progressive tax such that lower sale priced home will contribute a lower percentage to the State and higher priced homes will contribute a higher percentage to the State. One proposal will charge a 1.10% Excise Tax when the sale price of a home is below $500,000, 1.28% when the sale price of a home is between $500,000 and $1,500,000, 2.75% when the sale price of a home is between $1,500,000 and $3,000,000 and, 3.00% for homes that sell for greater than $3,000,000. The result in the Seattle Area will be minimal because most homes and condominiums sell between $500,000 and $1,500,000. Rural Washington homes will benefit the most because there are many sales under $500,000.
Cities and Counties will be allowed to charge an additional 0.25% to 0.50% Excise Tax to help fund homeless projects and provide funds for affordable housing. Municipalities must gain permission for these additional taxes through voter approval.