The Legislature recently adopted a bill (SB 5998) revising the rate structure of the state real estate excise tax (REET), which is imposed when real estate is sold. If signed by Governor Inslee, the new structure will become effective on January 1, 2020. Here is a chart comparing the new state REET to the tax it would replace.

The new tax schedule, shown in green, has a progressive structure. For a property worth $500,000 or less, the amount of tax due is equal to 1.1 percent of the value ($1.10 for each $100 of value). The tax on a $500,000 property is $5,500. For properties with value between $500,000 and $1.5 million, the tax is equal to $5,500 plus 1.28 percent of the increment of value in excess of $500,000. The tax on a $1.5 million property is $18,300 ($5,500 plus $12,800). For properties with value between $1.5 million and $3 million the tax is equal to $18,300 plus 2.75% of the increment in excess of $1.5 million. The tax on a $3 million property is $59,550. For properties with value in excess of $3 million, the tax is equal to $59,500 plus 3 percent of the increment in excess of $3 million. The tax on a $4 million property is $89,550.

The existing tax, shown in blue, is a flat rate of 1.28 percent ($1,28 for each $100 of value). At this rate, the tax on a $500,000 property is $6,400; the tax on a $1.5 million property is $19,200; the tax on a $3 million property is $38,400; the tax on a $4 million property is $51,200.

Low valued properties will pay less under the new tax than they do under the existing tax, while high valued properties will pay more under the new tax. The crossover point is a property value of $1,561,224, which pays $61,224 in either case.