Quick answer
Washington State real estate excise tax (REET) is a tax on the sale of real property, paid by the seller at closing.
The state portion is graduated based on the sale price:
| Portion of selling price | State REET rate |
|---|---|
| $525,000 and below | 1.10% |
| $525,000.01 – $1,525,000 | 1.28% |
| $1,525,000.01 – $3,025,000 | 2.75% |
| Above $3,025,000 | 3.00% |
Cities and counties add a local REET, commonly 0.25% or 0.50%, bringing the typical combined rate in most King County jurisdictions to roughly 1.60% to 1.78% on the first tier.
On a $1,000,000 sale in Bellevue, total REET is approximately $13,600 to $14,100.
What is real estate excise tax?
REET is an excise tax imposed on the transfer of real property ownership in Washington State. It is authorized under RCW 82.45 and administered by the Washington State Department of Revenue, with collection handled at the county level.
Two points that cause confusion:
It is not a property tax. Property tax is an annual tax on assessed value, paid by whoever owns the property. REET is a one-time tax triggered by a sale or transfer.
It is not a capital gains tax. REET is calculated on the full selling price, not on your profit. A seller who bought at $900,000 and sells at $950,000 pays REET on the full $950,000, not on the $50,000 gain.
Washington also imposes a separate 7 percent excise tax on certain long-term capital gains, but real estate is specifically exempt from that tax. The two are unrelated.
How the graduated rate actually works
The graduated structure is applied in tiers, not as a flat rate on the whole price. This is the most common calculation error.
Example: a $2,000,000 sale
| Tier | Amount in tier | Rate | Tax |
|---|---|---|---|
| First $525,000 | $525,000 | 1.10% | $5,775 |
| $525,001 – $1,525,000 | $1,000,000 | 1.28% | $12,800 |
| $1,525,001 – $2,000,000 | $475,000 | 2.75% | $13,062.50 |
| State REET subtotal | $31,637.50 | ||
| Local REET (0.50%) | $2,000,000 | 0.50% | $10,000 |
| Total REET | $41,637.50 |
A common mistake is applying 2.75 percent to the entire $2,000,000, which would produce $55,000. The tiered calculation produces substantially less.
REET by sale price
Approximate total REET including a 0.50 percent local rate:
| Sale price | State REET | Local (0.50%) | Total |
|---|---|---|---|
| $400,000 | $4,400 | $2,000 | $6,400 |
| $600,000 | $6,735 | $3,000 | $9,735 |
| $800,000 | $9,295 | $4,000 | $13,295 |
| $1,000,000 | $11,855 | $5,000 | $16,855 |
| $1,250,000 | $15,055 | $6,250 | $21,305 |
| $1,500,000 | $18,255 | $7,500 | $25,755 |
| $2,000,000 | $31,638 | $10,000 | $41,638 |
| $3,000,000 | $59,138 | $15,000 | $74,138 |
Local rates vary. Verify the rate for the specific jurisdiction where the property sits, since it is set by city and county rather than uniformly statewide.
Who pays REET in Washington?
The seller pays, by default and by long-standing convention. It appears as a debit on the seller's settlement statement and is deducted from proceeds at closing.
This differs from many states where transfer taxes are split or paid by the buyer. In Washington, it is a seller cost.
Important: the law makes the tax a lien on the property until paid. If the seller does not pay, the obligation can attach to the property, which is why escrow handles it directly rather than relying on the seller to remit afterward.
Parties can contractually agree to a different allocation, but this is rare in residential transactions and does not change the underlying lien.
Agricultural and timber land
Sales of land classified as agricultural or timberland are taxed at a flat 1.28 percent state rate rather than the graduated scale, plus applicable local REET. The classification must be in place at the time of sale.
REET exemptions
A number of transfers are exempt from REET. The most commonly used:
Gifts. A transfer with no consideration and no underlying debt assumed. If the recipient takes on an existing mortgage, the assumed debt is treated as consideration and REET applies to that amount.
Inheritance. Transfers to heirs or beneficiaries by will or intestate succession.
Divorce and legal separation. Transfers between spouses or domestic partners pursuant to a court decree of dissolution.
Transfers to and from a revocable trust where the grantor retains beneficial interest.
Adding or removing a spouse from title without consideration.
Transfers between an individual and a wholly owned entity where beneficial ownership does not change — for example, deeding a personally owned property into a single-member LLC you control.
Foreclosure and deed in lieu. Transfers to a lienholder in satisfaction of debt.
Government transfers. Sales to or from federal, state, or local government entities.
Boundary line adjustments that do not transfer beneficial ownership.
Mere change in identity or form of ownership where proportional interests are preserved.
Critical detail: exemptions are not automatic. You must file a REET affidavit claiming the specific exemption and citing the applicable Washington Administrative Code provision. Filing incorrectly, or failing to file, can result in the tax being assessed later with interest and penalties.
The controlling interest transfer rule
Washington closes a loophole that exists in some states. If a person or group acquires a controlling interest — 50 percent or more — in an entity that owns Washington real property, REET applies to the underlying real estate value, even though no deed was recorded.
The lookback period is 36 months. Transfers that individually fall below 50 percent but aggregate to a controlling interest within that window are captured.
This matters for anyone structuring a property purchase through an LLC or partnership transfer rather than a direct deed. The tax follows the beneficial ownership, not the paperwork.
Filing requirements and deadlines
A REET affidavit must be filed with the county treasurer at the time the deed is recorded. In practice, escrow prepares and files it as part of closing.
The tax is due at the time of sale. Late payment triggers:
- Interest at 1 percent per month from the date of sale
- A penalty of 5 percent of the tax if paid one month late
- 10 percent if two months late
- 20 percent if three or more months late
For exempt transfers, an affidavit is still required. Filing the affidavit with the correct exemption code is what establishes the exemption on the record.
Washington provides an online filing system (MyDOR) for REET affidavits, though most residential transactions are handled by escrow.
How REET affects your net proceeds
REET is one of three major seller costs at closing, and it is frequently the one sellers have not budgeted for.
Typical seller costs on a $1,200,000 Eastside sale:
| Cost | Amount |
|---|---|
| Buyer's agent commission (≈2.5%) | $30,000 |
| Listing agent commission (negotiated) | Varies |
| REET (state + 0.50% local) | ≈ $21,000 |
| Title insurance (owner's policy) | $1,800 – $3,200 |
| Escrow fees | $1,200 – $2,000 |
| Excise and recording fees | $200 – $400 |
| Prorated property taxes | Varies by closing date |
REET alone frequently exceeds $20,000 on Eastside transactions. Sellers running net-proceeds calculations without it are working from a number that is materially wrong.
Common questions
What is the excise tax rate in Washington State? The state real estate excise tax is graduated from 1.1 percent to 3 percent based on sale price, plus a local component typically between 0.25 and 0.50 percent.
Who pays excise tax on a home sale in Washington? The seller pays, and it is deducted from proceeds at closing. The tax is a lien on the property until paid.
Is real estate excise tax the same as capital gains tax? No. REET is calculated on the full sale price regardless of profit. Washington's separate 7 percent capital gains excise tax specifically exempts real estate.
Do I pay excise tax if I gift my house to a relative? A true gift with no consideration and no assumed debt is exempt, but you must file a REET affidavit claiming the exemption. If the recipient assumes a mortgage, REET applies to the assumed amount.
Is excise tax deductible on my federal return? Real estate transfer taxes are generally not deductible as an expense, but they can typically be added to your cost basis or subtracted from the amount realized on the sale. Consult a tax professional.
Do I pay excise tax when transferring property into an LLC? If beneficial ownership does not change — for example, transferring to a single-member LLC you wholly own — the transfer is generally exempt as a mere change in form. An affidavit is still required.
What is REET? REET is the standard abbreviation for Real Estate Excise Tax in Washington State.
Does Washington have a transfer tax? Yes. REET is Washington's real estate transfer tax, though it is officially called an excise tax.
Where to verify current rates
REET rates and local add-ons change. Verify current figures with:
- The Washington State Department of Revenue
- Your county treasurer's office
- Your escrow company, which calculates the exact figure for your transaction
We run the net-proceeds math before you list
Sellers should know their approximate net before deciding to sell, not discover it at signing. At Tribeca NW, we prepare a full net-proceeds estimate — including REET, commissions, title, escrow, and prorations — as part of every listing consultation.
Request a net-proceeds estimate from Tribeca NW →
Related reading: Selling a home in Washington State → | Washington State property tax guide →
This article is general information, not tax or legal advice. REET rates, exemptions, and filing requirements change. Verify current rules with the Washington State Department of Revenue or a licensed tax professional before relying on this information.
Tribeca NW Real Estate is a top-producing team serving Bellevue, Kirkland, Redmond, and the greater Puget Sound region. 1,675 homes closed. $1B+ in transaction volume. 875+ five-star reviews on Google and Zillow.
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