Excise Tax (aka Transfer Tax) – Who Pays it in Washington State?

“Excise tax” also referred to as “transfer tax” are taxes imposed by states, counties and municipalities on the transfer of ownership of real estate property. In many states buyers pay excise tax. This is not true for the state of Washington. In Washington sellers pay excise tax, not buyers. Excise tax amounts to 1.78% of the sales price in a real estate transaction.

If you are a buyer purchasing property in Washington state and you’re using a non-Washington state based company to do your mortgage, be prepared that 9 times out of 10 the non-Washington state mortgage company will incorrectly tack the excise tax fee onto your closing costs. Too often I’ve had relocation clients call distraught that their closing costs were much larger than they expected. When I ask them to check if transfer tax was added to their closing cost statement, this is usually the culprit. I’ve asked the non-Washington based lenders to remove it from their closing cost estimate but I’m shocked to find they will not do it. Not to fear the tax does eventually get removed from the buyers’ closing costs worksheets but the lenders wait for escrow to remove it at the closing table. I hope this blogs saves you from a sleepless night if this happens to you upon your relocation to Seattle. As always feel free to call me if you have any questions.