The Most Forgotten Closing Cost
Yes, that's right...This is the closing cost that we see clients most surprised about on a consistent basis when they sign final closing costs, and sadly, one of the most expensive closing costs involved in a real estate transaction.
That cost is Excise Tax.
Excise is a transfer tax that Sellers of real estate in Washington State are required to pay when they sell property.
It is 1.78% of the contract sales price in most counties in Washington State, including King, Snohomish, Pierce, Whatcom, Thurston, Skagit, and Island Counties.
In some of the outlying areas of Washington state, the tax is 1.53%, such as in Adams and Pacific County, some areas of Douglas and Okanogan Counties, and more. The city of Asotin within Asotin County takes the cake with the highest excise tax percentage in the state, weighing in at a hefty 2.03%. For a full list of excise tax rates in all Counties of Washington State, go here.
Excise Tax is an automatic lien on real estate, meaning that it must be paid in order to close a transaction. Excise is collected by the escrow agent, through the closing process and remitted to the County Treasurer when the conveyance deed from Seller to Buyer goes up to the courthouse to record. Without payment of excise tax, the deed transfer cannot take place.
As a real estate agent, the best thing you can do is to prepare the Seller for costs that will need to be paid to sell. Sometimes they are not pretty, but they are reality and preparing your client with an accurate depiction of their costs to sell will make your job easier later on (when your estimate was spot on) and provide excellent service to your clients so they can prepare for their next venture.
If you are unsure of what closing costs to calculate or what figures go into the mix, our Net Proceeds Calculator is a great tool. It's easy and a Seller's Net Proceeds can be calculated in less than 30 seconds!
For further questions about Excise Tax or any escrow expertise, email or call us anytime.