Does Washington have a real estate transfer tax?
Yes. Washington calls it the real estate excise tax, or REET, and it is imposed on every sale of real property under RCW 82.45.060. Since January 1, 2020, the state portion has been graduated: each slice of the price is taxed at its own rate, the same way federal income tax brackets work.
For sales closing in 2026, the state tiers are 1.1% on the first $525,000, 1.28% from $525,000.01 to $1,525,000, 2.75% from $1,525,000.01 to $3,025,000, and 3% on everything above $3,025,000. Those are the Department of Revenue’s thresholds that took effect January 1, 2023.
Timberland and agricultural land are the exception. They pay a flat 1.28% no matter the price. An apartment building is classified by its predominant use, and a 5+ unit building falls in the graduated tiers, not the flat rate.
| Portion of selling price (2026) | State REET rate |
|---|---|
| $0 to $525,000 | 1.10% |
| $525,000.01 to $1,525,000 | 1.28% |
| $1,525,000.01 to $3,025,000 | 2.75% |
| Above $3,025,000 | 3.00% |
The thresholds change on January 1, 2027
RCW 82.45.060 indexes the first threshold every four years to shelter inflation, capped at 5%, and moves the higher thresholds up by the same dollar amount. The Department of Revenue has published the next set: starting January 1, 2027, the tiers break at $551,000, $1,551,000 and $3,051,000. The rates stay at 1.1%, 1.28%, 2.75% and 3%.
Each threshold rises by $26,000, so the savings are modest. A $5,000,000 sale drops from $119,075 of state REET in 2026 to $118,581 in 2027, a difference of $494. That isn’t a reason to push a closing into January.
We also checked for a rate change. The statute’s most recent amendment, 2026 c 171, rewrote the definition of timberland. It did not change the graduated rates or add a new top tier. SB 6294, filed in the 2025–26 session, proposed letting counties set an affordable housing REET of up to 0.5% and letting cities adopt it. That is a local option, not a change to the state rates.
Local REET: what cities and counties add
Local REET is a separate tax under chapter 82.46 RCW, added on top of the state amount. It is a flat percentage of the full price, not graduated.
Any city or county can levy a first 0.25% (REET 1). Cities and counties that fully plan under the Growth Management Act can add a second 0.25% (REET 2). In practice the Department of Revenue’s May 2026 local rate table shows 0.50% for Seattle, Bellevue, Tacoma, Spokane and Vancouver.
San Juan County is the outlier. It levies a 1% conservation area REET and a 0.5% affordable housing REET on top of REET 1 and 2, for a local rate of 2.00% in Friday Harbor and the unincorporated county. The conservation tax is legally owed by the buyer, and the housing tax is shared, with at least half owed by the buyer.
- Seattle, Bellevue, Tacoma, Spokane, Vancouver: 0.50% local (May 2026 DOR table).
- San Juan County, including Friday Harbor: 2.00% local.
- Check the location code on the affidavit, since rates follow the parcel’s exact taxing jurisdiction.
Who pays REET in Washington, and when
The seller. The Department of Revenue states that the seller usually pays, and that the buyer becomes responsible if the seller does not. Unpaid REET becomes a lien on the property, which is why escrow collects it from the seller’s proceeds at closing. A purchase contract can shift the cost, but that is rare in Washington.
The tax is due at the time of sale and is paid to the county treasurer when the deed is recorded, along with a real estate excise tax affidavit. Use the single location affidavit when the property sits in one local jurisdiction code, or the multiple locations affidavit and worksheet when it spans more than one.
Selling price includes debt. Under RCW 82.45.030, total consideration includes any mortgage, lien or contract debt the buyer takes over, so assuming the seller’s loan does not shrink the taxable amount.
Selling the LLC instead of the building
Washington taxes entity sales. If 50% or more of the ownership of an entity that owns Washington real estate changes hands within a 36-month window, REET is due as if the property had been sold. The taxable amount is the true and fair value of the real estate the entity owns.
The controlling interest return is due within five days of the transfer, and penalties and interest apply if it isn’t filed within one month. It can be filed through My DOR. Owners who sell 49% now and the rest two years later should assume the 36-month lookback catches both.
Exemptions that matter to investors
Most exemptions sit in chapter 458-61A WAC. A few come up in almost every apartment portfolio.
A mere change in identity or form is exempt under WAC 458-61A-211, for example deeding a building into an LLC owned by the same people in the same pro rata shares. Transfers into a family-owned entity can also qualify, but the exemption is recaptured if the entity later sells the property or an owner transfers an interest outside the family group.
A trustee’s foreclosure sale is exempt, and so is a deed in lieu of foreclosure when no other consideration passes, under WAC 458-61A-208. If a senior loan stays on the property after the deed in lieu, that remaining debt is taxable consideration.
Gifts can be exempt, but you file a REET supplemental statement with the affidavit to claim it.
- LLC formation with identical ownership: exempt (WAC 458-61A-211).
- Sale of 50% or more of the entity: taxable within 36 months.
- Foreclosure by trustee and clean deed in lieu: exempt (WAC 458-61A-208).
- 1031 exchange: not exempt; tax is paid on the sale.
Does a 1031 exchange avoid REET?
No. A 1031 exchange defers federal income tax, not Washington REET. Under WAC 458-61A-213, an exchange facilitator’s acquisition of property is taxable. The rule spares a second tax on the facilitator’s onward transfer only when the right tax was paid on the first step, the facilitator took title only to complete the exchange, and the buyer supplied the funds.
In plain terms, REET is paid once on the relinquished building, and once again when you buy the replacement property if it is in Washington. Budget for both.
Worked example: REET on a $2,000,000 and a $5,000,000 Washington apartment sale
Take a 16-unit building in Seattle selling for $2,000,000 in 2026. The first $525,000 is taxed at 1.1%, or $5,775. The next $1,000,000 at 1.28% is $12,800. The remaining $475,000 at 2.75% is $13,062.50. State REET totals $31,637.50. Seattle’s 0.5% local REET on the full price adds $10,000, for a total of $41,637.50, or about 2.08% of the price.
At $5,000,000, the state tax is $5,775 plus $12,800, plus $41,250 on the $1,500,000 slice at 2.75%, plus $59,250 on the $1,975,000 above $3,025,000 at 3%. That is $119,075. Local REET adds $25,000, so the seller pays $144,075, about 2.88% of the price.
The same $2,000,000 sale in Friday Harbor would carry $40,000 of local REET instead of $10,000, for $71,637.50 in total. Have your escrow officer confirm the location code and the final figure before you settle on a net price.
| Line item | $2,000,000 sale | $5,000,000 sale |
|---|---|---|
| 1.1% on first $525,000 | $5,775.00 | $5,775.00 |
| 1.28% on $525,000.01 to $1,525,000 | $12,800.00 | $12,800.00 |
| 2.75% on $1,525,000.01 to $3,025,000 | $13,062.50 | $41,250.00 |
| 3% above $3,025,000 | $0.00 | $59,250.00 |
| State REET | $31,637.50 | $119,075.00 |
| Seattle local REET (0.5%) | $10,000.00 | $25,000.00 |
| Total REET | $41,637.50 | $144,075.00 |
| Same sale under 2027 thresholds (state only) | $31,208.50 | $118,581.00 |
Washington compared with its neighbors
Washington sits next to two states that tax transfers lightly or not at all. Idaho has no real estate transfer tax. Oregon has no state tax, and ORS 306.815 bars cities and counties from adopting new ones, though taxes already in effect on March 31, 1997 survive. The best known is Washington County, Oregon, at $1 per $1,000 of price.
For a seller weighing a 1031 exchange out of state, that matters on the buy side. A $5,000,000 replacement property in Boise carries no transfer tax, while the same purchase in Seattle would cost $144,075 when you later sell.
| State | Transfer tax on a $5,000,000 sale |
|---|---|
| Washington (Seattle) | $144,075 (state tiers plus 0.5% local) |
| Oregon (Washington County) | $5,000 ($1 per $1,000) |
| Oregon (most counties) | $0 |
| Idaho | $0 |
How REET fits into your total cost of selling
REET comes off the top of your proceeds whether you have a gain or not. On a large building it can rival brokerage and closing costs combined.
Washington’s capital gains excise tax does not apply to real estate, so the income tax side of a sale is mostly federal: long-term capital gains on the profit, depreciation recapture taxed at up to 25% on the unrecaptured section 1250 gain, and the 3.8% net investment income tax for many owners. A 1031 exchange can defer the federal tax, but as noted above it does nothing for REET.
When you model a sale, list REET as its own line, use the parcel’s actual local rate, and check whether a closing in early 2027 changes the state figure enough to matter. For most apartment sales it won’t.
Selling your Washington apartment building to Skyline
Skyline Capital Investments buys apartment buildings with five or more units across Washington. We buy directly, can offer seller-carry terms, and work within 1031 exchange deadlines when you are trading up. We underwrite with the REET figure in view so your net number holds up at closing.
Send the property address and unit count through the form on this page, or call (469) 660-2977. We typically respond within 48 hours.
