Washington State Excise Tax,Home Selling Tips
Washington State Excise Tax is a huge hidden fee that is charged by the State at the time of closing. Well, its not a hidden fee if the seller is aware of the taxes associated with selling their home before the make the decision to list their house for sale. We decided we should create a quick page that talked about home selling tips to make sure that people understood what some of the cost are when they sell their home and who is charging them and why.
What is Washington State Excise Tax?
Whenever a home owner wants to sell their home in Washington State the State will charge a 1.28% Excise tax fee that is due at the time of the Home Sale. The home owner will see the charge on their Final HUD Statement when they are at the closing table with their selected Escrow Company. The tax is always charged to the seller but in some cases if the seller avoids payment then the buyer will be forced to pay these fees. The average sales price for Homes for Sale in Tri Cities is $240,000. As you can see that means the average home owner pays Washington State $3,072 when they sell their home. This is a large chunk of change for most home owners and the increased fees effects more people than just the home owner. Most home owners are trying to get as much money out of their home as possible when they sell their home so that they can have a larger down payment on their next home. Therefore, the lower the fees are when the home owner sells their home then the more of their money they get to keep for their next purchase. The seller is already paying for the Broker fees so that the broker can advertise their home for sale so adding on an Excise Tax makes the profit margin reduce pretty quick. Washington State is one of the few States that charges home owners for property taxes and Excise tax.
The cost is a little higher if you live in Benton or Franklin County due to the fact their is also a county rate that is added onto the Excise Tax. When the Escrow officer takes the sellers recording documents to the county treasures office they add on .06% to the state fee making the sellers total fee 1.78% or $4,272 from the $240,000 home purchase figure mentioned above.
When the Washington State Excise Tax is collected 1.3% of that fee is retained at the county level. Then from the net proceeds that go to the state 6.10% goes into the public works assistance account. To get more information on how the money is collected and spent please review RCW 43.155.050 and RCW 43.08.290.
Its hard to find true statistical data on how much money Wa Excise Tax generates every month and where all of that money goes. However, I say that in the Tri Cities area we average about 210 home sales every month through out the year. Therefore, you would be able to say if the average tax fee that is collected is $4,272 then the monthly revenue collected to the state would be $897,120 just in 2 counties within the state. That’s going to create a huge budget pretty quick because Benton and Franklin Counties are two pretty small counties compared to the 30 plus other counties that are spread out through out Washington State.
I think this subject can get kind of interesting since the intent of Wa Excise tax is to give 1.3% to public works assistance to help fund maintenance of local government public works facilities. Then to give 1.6 goes into city/county assistance then the rest of the money goes into a general fund.
My question would be to see if anybody knows where to review the historic value of the funds collected and the budgets that were approved to tap into the funds to finance projects? There is a General Slush fund that has should be accumulating a large profit but its hard to get a detailed statement on how much money this tax creates for the state and what the state does with the money.