Real Estate Transfer Tax: What Sellers Need to Know in Washington

Selling your home in Washington comes with more closing costs than many sellers expect — and the real estate excise tax (REET) is one of the largest. ³ Washington State uses a graduated REET structure that can cost sellers thousands of dollars at closing. In this guide, you'll learn how Washington's transfer tax works, who pays it, what exemptions exist, and how to factor it into your net proceeds. ¹

Key Takeaways

• Washington State calls its transfer tax the Real Estate Excise Tax (REET). It uses a graduated rate structure based on sale price, ranging from 1.1% to 3%.
• On a $300,000 home in King County, expect to pay roughly $3,300–$3,500 in REET. Higher-value properties in Seattle or Bellevue face steeper rates.
• In Washington, REET is typically the seller's responsibility, though it can be negotiated in the purchase agreement.
• Transfer taxes are not deductible from your federal income tax but may be added to your cost basis for capital gains calculations.
• Certain transfers — including family gifts, divorce settlements, and inherited properties — may qualify for REET exemptions, but proper documentation is required.

Sources: Washington State Department of Revenue; closing disclosure forms; IRS guidelines as of 2025.

What is Washington's Real Estate Excise Tax (REET)?

Washington State does not use the term "transfer tax" in official documents — it calls this charge the Real Estate Excise Tax (REET). This is a one-time tax collected whenever ownership of real property changes hands. It applies to homes, land, investment properties, and condos throughout the state.

The Washington State Department of Revenue administers REET at the state level, while counties collect it at closing. You pay REET once, at the time of sale — not each year like property tax. The amount is based on the selling price of the property, not its assessed value or what you still owe on your mortgage.

Counties including King, Pierce, Snohomish, and Spokane all follow the same state graduated rate structure, though some local jurisdictions may apply additional fees.

Who Pays the REET, and When?

In Washington, the seller is legally responsible for paying REET. While payment is technically negotiable between buyer and seller in a purchase agreement, local custom strongly favors the seller covering this cost.

REET is paid at closing. Your title company or escrow officer calculates the amount, deducts it from your sale proceeds, and remits payment to the county. You will see it as a line item on your Closing Disclosure. You do not need to bring a separate check — it comes directly out of what you receive from the sale.

How Is Washington's REET Calculated?

Washington's Graduated Rate Structure

Unlike states with a flat transfer tax rate, Washington uses a tiered system where the rate increases as the sale price rises. As of 2025, the state REET rates are:

• 1.1% on the portion of the sale price up to $525,000
• 1.28% on the portion between $525,000 and $1,525,000
• 2.75% on the portion between $1,525,000 and $3,025,000
• 3% on the portion above $3,025,000

This means sellers of high-value homes in Seattle, Bellevue, or other competitive markets pay significantly more than sellers in lower-priced areas like Spokane or Olympia.

Example Calculations for Washington Homes

Here is what REET looks like at different price points:

• $300,000 home (Spokane): 1.1% × $300,000 = $3,300
• $600,000 home (Tacoma): 1.1% on first $525,000 ($5,775) + 1.28% on remaining $75,000 ($960) = $6,735
• $1,200,000 home (Bellevue): 1.1% on first $525,000 ($5,775) + 1.28% on remaining $675,000 ($8,640) = $14,415
• $2,000,000 home (Seattle): Calculated across all applicable tiers, totaling approximately $33,000+

Always verify exact figures with your escrow or title company, as local surcharges may apply in some jurisdictions.

State and Local REET Rates Compared

Washington's REET is among the more complex structures nationally. Some nearby states have no transfer tax at all — Idaho, Montana, and Oregon (most counties) do not impose one — making Washington's graduated approach stand out. Here is a snapshot of how Washington compares:

Check with your title company or the Washington State Department of Revenue for the most current rates before closing.

Who Is Responsible for Paying REET?

Local Customs and Negotiation

Washington law places REET liability on the seller, but buyers and sellers may negotiate who covers it in their purchase agreement. In practice, Seattle and Bellevue sellers almost always pay the full REET amount. In some slower markets or distressed sales, a buyer may agree to share or cover the cost to strengthen their offer.

If you are selling in a competitive market or under time pressure — due to foreclosure, divorce, or relocation — understanding your REET obligation before listing helps you price your home accurately and avoid surprises at closing.

How REET Appears on Your Closing Disclosure

Your escrow officer lists REET as a separate line item under "Other Costs" on your Closing Disclosure. The amount is deducted directly from your sale proceeds — you do not pay it separately. The escrow company remits the tax to the county treasurer's office on your behalf.

Review this section carefully before signing. Confirm the calculation matches the graduated rate applied to your specific sale price, and verify that any exemptions you qualify for have been applied correctly.

Exemptions to Washington's REET

Family Transfers and Divorce Settlements

Washington law provides REET exemptions for certain property transfers that do not involve a traditional sale. Common qualifying situations include:

• Transfers between spouses or domestic partners, including during a divorce settlement
• Transfers to a revocable living trust where the grantor is also the beneficiary
• Transfers due to court order, such as divorce decrees requiring one spouse to convey property to the other
• Gifts of real property to a family member where no money changes hands

Even when REET does not apply, you must still complete and file the Real Estate Excise Tax Affidavit (Form 84-0001B) with the county treasurer. Submitting incomplete paperwork can delay your title transfer and create legal complications. Always confirm exemption eligibility with your closing agent or a Washington real estate attorney.

Inheritance, Trusts, and Probate Transfers

Property inherited through a will or passed through probate may be exempt from REET. Washington requires proper probate documentation — such as a certified court order or letters testamentary — to support the exemption claim at closing.

Transfers into or out of a living trust may also qualify for exemption when the grantor and beneficiary are the same person. If you inherited a home and plan to sell it quickly, consult with a Washington probate attorney to confirm your REET status and understand how the stepped-up cost basis rules affect your capital gains calculation.

Washington does not have a state inheritance tax, but it does impose an estate tax on estates exceeding $2.193 million (as of 2025). This is separate from REET and is paid by the estate, not at closing.

Special Situations Affecting REET in Washington

Mortgaged Properties and Cash Sales

REET is calculated on the full sale price regardless of whether the buyer pays cash or uses financing. If you sell your Tacoma home for $450,000 but still owe $200,000 on your mortgage, REET applies to the full $450,000 — not just your equity.

Washington does not impose a separate mortgage recording tax, unlike some other states. Cash buyers and financed buyers pay identical REET amounts. Your escrow company will handle REET payment before releasing any proceeds to you.

Selling to Investors, Short Sales, and Foreclosures

REET applies to all Washington real estate transactions — including sales to cash investors, short sales approved by your lender, and bank-owned (REO) foreclosure properties. The tax is calculated on the actual sale price, even if it is below market value.

• Short sales: REET is based on the price the lender approves, not the original loan balance.
• Foreclosure sales: REET applies unless a specific statutory exemption exists; consult a Washington real estate attorney for your situation.
• LLC and entity transfers: Transferring a controlling interest in an entity that owns Washington real property may trigger REET based on fair market value, even without a direct deed transfer.
• Cash investors: Same REET rates apply as any other buyer — there is no discount or exemption for cash transactions.

Tax Considerations for Washington Sellers

REET paid at closing is not deductible from your federal or Washington state income tax return. However, you may add it to your property's cost basis when calculating capital gains. A higher cost basis reduces your taxable profit if you sell for more than you paid.

Washington does not have a personal income tax, but it does impose a capital gains tax (enacted in 2022) on long-term capital gains above $262,000 (for 2025). The sale of a primary residence is generally exempt from Washington's capital gains tax under the federal exclusion rules — up to $250,000 for single filers and $500,000 for married couples filing jointly — but investment properties and second homes are not.

If you sell investment property in Washington, work with a CPA or tax advisor to understand how both the federal capital gains rules and Washington's capital gains tax interact with your REET obligation and cost basis.

How to Find Washington's Current REET Rate

The Washington State Department of Revenue maintains current REET rates and exemption information at dor.wa.gov. Your county treasurer's office — including offices in Seattle (King County), Tacoma (Pierce County), and Spokane — can confirm local rates and required forms.

Your escrow or title company will calculate REET as part of your closing paperwork and can answer specific questions about your transaction. Always verify the rate before listing your home so you can factor it accurately into your net proceeds estimate.

Questions to Ask Your Closing Agent in Washington

• What is the exact REET amount based on my sale price?
• Does my transfer qualify for any exemptions under Washington law?
• What documentation do I need to claim an exemption on the REET affidavit?
• Are there any additional local fees beyond the state REET?
• How will REET appear on my Closing Disclosure, and when is payment remitted?

Factoring REET Into Your Net Proceeds

Before you accept an offer or set a listing price, calculate your REET obligation. For most Washington sellers, this tax represents one of the largest closing costs after agent commissions. Use the graduated rate tiers to estimate your specific amount, then subtract it — along with your remaining mortgage balance, agent fees, and other closing costs — to determine your actual take-home proceeds.

Sellers in higher-priced markets like Seattle and Bellevue need to be especially careful, since moving into upper rate tiers can add thousands of dollars in unexpected tax at closing.

FAQs

1. What is Washington's Real Estate Excise Tax (REET)?

REET is Washington's version of a transfer tax — a one-time fee paid at closing whenever real property changes ownership. It is based on the sale price and uses a graduated rate ranging from 1.1% to 3%.

2. Who pays REET in Washington — buyer or seller?

Washington law assigns REET liability to the seller. While it can be negotiated, sellers almost always pay it in practice, with the amount deducted from sale proceeds at closing.

3. Are there exemptions from Washington's REET?

Yes. Common exemptions include transfers between spouses or domestic partners, transfers to a living trust where the grantor is the beneficiary, court-ordered transfers during divorce, and certain inherited properties. The REET Affidavit must still be filed even when an exemption applies.

4. Does Washington have a capital gains tax that affects home sales?

Washington enacted a capital gains tax in 2022, but the sale of a primary residence is generally exempt. Investment properties and second homes may be subject to the tax on gains above the annual threshold. Consult a tax advisor for your specific situation.

5. Does REET apply to cash sales or sales to investors?

Yes. REET applies to all Washington real estate transactions regardless of how the buyer pays. Cash sales, investor purchases, short sales, and foreclosures are all subject to REET based on the actual sale price.

References

1. ^ https://gwipp.gwu.edu/sites/g/files/zaxdzs6111/files/downloads/Real%20Estate%20Transfer%20Taxes-%20Widely%20Used%2C%20Little%20Conformity.pdf
2. ^ https://narfocus.com/publication-issue/view/2023-07-05-state-and-local-issues-real-estate-transfer-tax
3. ^ https://www.bankrate.com/real-estate/transfer-taxes/

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