SENATE BILL REPORT

SB 5408

BYSenators McCaslin and Rasmussen

Revising the definition of sale as it relates to the real estate excise tax.

Senate Committee on Financial Institutions & Insurance

Senate Hearing Date(s):February 2, 1989; February 14, 1989

Majority Report:  Do pass.

      Signed by Senators von Reichbauer, Chairman; Johnson, Vice Chairman; McCaslin, Rasmussen, Sellar, West.

Senate Staff:Benson Porter (786-7470)

                  February 16, 1989

AS REPORTED BY COMMITTEE ON FINANCIAL INSTITUTIONS & INSURANCE, FEBRUARY 14, 1989

BACKGROUND:

Pursuant to state statute, the real estate tax is collected when real property is sold.  Certain transactions are exempt from this tax, including property transfers by gift or divorce settlements.

Assumption of an outstanding obligation secured by a mortgage or deed in lieu of forfeiture is also exempt from the real estate excise tax.  This exemption only applies if the original lender is aware of the assumption and other compensation is not paid.  If the original obligation is paid off and the refinancing is not from the original lender, the transaction is not exempt and would be subject to the tax.

SUMMARY:

If property is transferred and there is no consideration passed between the parties other than relief from the underlying debt on the property, the transfer is exempt from real estate excise tax.

Appropriation:    none

Revenue:    none

Fiscal Note:      requested January 25, 1989

Senate Committee - Testified: D. L. Cooper and Dave Johnson, Department of Revenue; Burt L. Talcott, Washington Association of Realtors (pro)