Real estate excise tax (REET)

Key Takeaways

• Washington's real estate excise tax is charged on the selling price of real property, not on the seller's profit.
• The state portion is graduated across price tiers, and the city or county where the property sits adds a local rate on top.
• The tax is the seller's obligation by statute, and the Department of Revenue warns that an unpaid tax becomes the buyer's problem.
• The county auditor may not accept a deed for recording until the excise tax has been paid to the county treasurer.

What It Means

The real estate excise tax, known across Washington as REET, is a tax on the sale of real property. It is figured on the selling price rather than on the seller's gain, so a seller who breaks even, or loses money, still owes it. That is the first thing to get straight. REET is a transfer tax, not an income tax, and it has nothing to do with capital gains.

The state portion is graduated. Lower slices of the price are taxed at a lower rate and higher slices at a higher rate, which means a large sale pays a blended rate instead of one flat percentage. On top of the state portion, the city or county where the property sits adds its own local rate, so the total varies by location. Mechanically, a REET affidavit goes to the county treasurer with the Deed, the treasurer collects the tax and stamps the affidavit, and only then will the county auditor accept the deed for Recording. In everyday practice the escrow officer handles all of it and the tax shows up as a seller charge on the settlement statement.

How It Works in Washington

REET is set by chapter 82.45 RCW. RCW 82.45.060 fixes the graduated state rates on the selling price: 1.1 percent on the lowest tier, 1.28 percent on the next, 2.75 percent above that, and 3 percent on the top tier, with the Department of Revenue adjusting the tier thresholds every four years for growth in the consumer price index for shelter. For sales through December 31, 2026, the Department of Revenue publishes those thresholds as $525,000, $1,525,000, and $3,025,000. Land classified as timberland or agricultural land is taxed at a flat 1.28 percent instead. RCW 82.45.080 states that the tax is the obligation of the seller, and the Department of Revenue adds that if the seller does not pay it, the buyer is responsible. RCW 82.45.090 requires the tax to be paid to and collected by the treasurer of the county, and provides that no instrument of sale or conveyance evidencing a taxable sale may be accepted by the county auditor for filing or recording until the tax is paid. Counties and cities may impose a local excise tax under RCW 82.46.010, so what escrow collects at Closing is the state tier tax plus the local rate for that location.

Example

Angela Ruiz sells her house inside the city of Spokane for $500,000 and closes in September 2026. The entire price sits in the lowest state tier, so the state portion is 1.1 percent, or $5,500. The city of Spokane's local rate is 0.50 percent, which adds $2,500. Escrow prepares the REET affidavit, holds back $8,000 from Angela's proceeds, and delivers the affidavit and payment with the deed to the Spokane County treasurer. The treasurer stamps the affidavit, and the auditor records the deed the same afternoon. Angela's net drops by the full $8,000 even though her gain on the sale was only about $60,000, because the tax follows the price and not the profit.

Common Mistakes and Exam Traps

• REET is charged on the selling price, not on the seller's gain, so a seller with no profit still owes the tax.
• The state rate is graduated by tier. A $2,000,000 sale is not taxed at a single flat percentage across the whole price.
• REET is a state and local transfer tax. It is not the annual county property tax and it is not a federal tax.
• What the unpaid tax blocks is recording, not the sale itself. The county auditor will not record the deed until the tax is paid.