What is Real Estate Excise Tax?
Ben Franklin once famously said, “In this world nothing can be said to be certain, except death and taxes.” This holds true when it comes to selling your home. While many people mistakenly believe that they will owe sales tax on their property when they go to sell it, fortunately this is not the case. Instead, the seller of the the property owes what is called Real Estate Excise Taxes.
How Much is Washington State Real Estate Excise Tax?
The amount charged to the seller varies by the county and city in which the property is located. In both Pierce County and King County the majority of sellers will pay 1.78% of the sales price at closing. The tax is collected by the escrow company at the time of closing. For example, on a $250,000 house sold in the City of Tacoma, the state excise tax paid by the seller would be $4,450. The same house sold in Friday Harbor (which currently has an excise tax of 2.78% would pay taxes of $6,950.
What is Excise Tax used for?
According to the Washington State Department of Revenue, “1.3% of the state tax collected by counties is retained to cover administration costs. Of the net proceeds to the state, 6.1% goes into the public works assistance account to help fund maintenance of local government public works facilities created in RCW 43.155.050, and 1.6% goes to the city/county assistance account created in RCW 43.08.290. The remainder of the state tax goes into the general fund.”
Figuring out the exact costs of selling your home can be complex, contact us today for information tailored to your specific situation.