A Washington seller is closing on the sale of a commercial building for $3,500,000. The seller's closing attorney asks for the REET calculation. Which of the following correctly identifies the rate that applies to the portion of the sale price above $3,025,000?
Correct Answer
A) 3.0%, which is the fourth-tier rate applicable to the portion above $3,025,000
Under RCW 82.45, Washington's graduated REET schedule has a fourth tier that applies a rate of 3.0% to the portion of the sale price exceeding $3,025,000. For a $3,500,000 sale, the portion above $3,025,000 is $475,000, which would be taxed at 3.0%. The fourth tier was established as part of Washington's 2019 REET reform, which created the graduated structure replacing the prior flat rate. This is the highest tier in Washington's current REET schedule.
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Related Topics & Key Terms
Key Terms:
Related Concepts
The cost approach estimates a property's value by calculating the current cost to rebuild the improvements, subtracting accumulated depreciation, and adding the land value. It is most reliable for new construction and special-purpose properties.
Depreciation is an accounting method of allocating the cost of an asset over its useful life, allowing investors to deduct a portion of the asset's cost each year.
Highest and best use is an appraisal concept that identifies the most profitable, legally permitted, physically possible, and financially feasible use of a property. It is the foundation of all property valuation.
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