Selling a Luxury Condo is About to Get More Expensive – Washington State Excise Tax
Lawmakers in the 2019 Washington State Legislative session just made selling a home or condo in Washington more expensive for high-end homeowners.
Passing both the House and Senate this past week, the state’s real estate excise tax will be adjusting in 2020, which is expected to raise $243.5 million for the state’s coffers.
Washington State will be moving from a single rate for all home sales to a tiered rate based on the selling price of the property. Currently, the statewide rate is 1.28%. However, individual counties and municipalities can tack on their own tax.
For example, there is an additional 0.5% in King, Snohomish and Pierce counties resulting in a total rate of 1.78%.
Fortunately, the excise tax rate adjustment won’t affect the average homeowner as the increased rates apply to home sales over $1,500,000. For homes and condos under $1,500,000 the rate either decreases or stay the same.
Effective January 1, 2020 the new excise tax for home sales paid by the seller will be (plus a 0.5% county tax for King, Snohomish & Pierce counties) :
| Home Sale Price | Old Tax Rate (with county tax) | New State Tax Rate | New Tax Rate with county tax |
|---|---|---|---|
| Up tp $500,000 | 1.28% (1.78%) | 1.1% | 1.6% |
| $500,001 to $1,500,000 | 1.28% (1.78%) | 1.28% | 1.78% |
| $1,500,001 to $3,000,000 | 1.28% (1.78%) | 2.75% | 3.25% |
| Over $3,000,000 | 1.28% (1.78%) | 3.0% | 3.5% |
If your home sells for $500,000 or less, you’ll see a little break. But, if it sells for more than $1,500,001 then you’ll see a significant increase in the excise tax, nearly doubling.
Here are some examples for a Seattle area home or condo with the county tax included:
| Home Sales Price | Old Tax Amount | New Tax Amount | Difference |
|---|---|---|---|
| $350,000 | $6,230 | $5,600 | - 10.1% |
| $500,000 | $8,900 | $8,000 | - 10.1% |
| $500,001 | $8,900 | $8,900 | 0% |
| $1,500,000 | $26,700 | $26,700 | 0% |
| $1,500,001 | $26,700 | $48,750 | + 82.6% |
| $3,000,000 | $53,400 | $97,500 | + 82.6% |
| $3,000,001 | $53,400 | $105,000 | + 96.7% |
Homeowners should keep in mind the large shift in taxes around the three threshold levels ($500,000, $1,500,000 and $3,000,000) as a relatively small change in price could cost thousands extra in taxes.
If you own a luxury condo and have contemplated selling in the next year or so, then you should seriously consider selling this year.
Got questions about the Washington state real estate excise tax, the cost of selling or would like to know more about selling your condo? Our team of experienced condo specialists are here to help. Just drop us message.
