Tips for Home Selling | Will You Pay More or Less Excise Tax in 2020?

If you are trying to decide whether to sell your home year or next, one of the variables you might want to consider and prepare for is the new 2020 Real Estate Excise Tax (REET). Currently the Washington state excise tax is 1.28% and then local municipalities add their excise tax on top of that, with most cities in our area adding .5% so the average total REET is 1.78%. Effective 1/1/2020 this will change to a new sliding scale based upon the home’s sales price. Depending on your price point you might want to sell before or after the end of the year.

New Progressive REET Rates

Home Sales Price REET (including standard .5% municipality tax)
0-$500,000 1.60%                    You will pay less in 2020
$501,000-$1,500,000 1.78%                    You will pay less in 2020
$1,501,000 – $3,000,000 3.25%                    You will more in 2020
$3,000,000 + 3.50%                    You will more in 2020

 

Here are some sample calculations compared to 2019

Home Sales Price 2019 REET 2020 REET
$500,000 $500,000*1.78%=$8,900 $500,000*1.60%=$8,000
$750,000 $750,000*1.78%=$13,350 $500,000*1.60%=$8,000
$250,000*1.78%=$4,450                 Total =$12,450
$1,500,000 $1,500,000*1.78%=$26,700 $500,000*1.60%=$8,000
$1,000,000*1.78%=$17,800                  Total =$25,800
$2,500,000 $2,500,000*1.78%=$44,500 $500,000*1.60%=$8,000
$1,000,000*1.78%=$17,800
$1,000,000*3.25%=$32,500                 Total =$58,300
$3,500,000 $3,500,000*1.78%=$62,300 $500,000*1.60%=$8,000
$1,000,000*1.78%=$17,800
$1,500,000*3.25%=$48,750
$500,000*3.50%=$17,500
Total =$92,050
Posted on September 28, 2019 at 11:36 pm
Michelle Blue | Category: Real Estate Transitions, Tips for Home Selling | Tagged , ,

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