Gifts of Realty

A gift of a property is fully exempt from tax under the Washington Administrative Code.  WA WAC 458-61A-201(1) states that “Generally, a gift of real property is not a sale, and is not subject to the real estate excise tax. A gift of real property is a transfer for which there is no consideration given in return for granting an interest in the property.”  That WAC should be cited in the Real Estate Excise Tax (“REET”) affidavit if your transaction is a gift.  If a gift, you must file the gift affidavit with the REET.  There are few questions in the gift affidavit that your circumstances might not perfectly into.

 If the transaction is a gift, but, there is still a mortgage on the property that was gifted, then, you must pay excise tax on the amount of the mortgage, provided that the grantee (let’s say daughter) will assume and pay off the mortgage. If the grantor (let’s say “Mom”) will continue to pay off the entire debt on the property, no excise/transfer tax is due. This is where you might stumble on the gift affidavit. What if Mom commits to pay half of the mortgage, and, daughter commits to pay the other half?  There are only check boxes on the gift affidavit for either Mom pays 100% of the existing mortgage, or, daughter pays 100% of the existing mortgage. 

If you have questions, our office would be eager to assist.