Washington Administrative Code › Title 458 - Revenue, Department of › Chapter 458-61A - Real estate excise tax › EXEMPTIONS AND EXCLUSIONS › Section 458-61A-211 - Mere change in identity or form-Family corporations and partnerships

Current through Register Vol. 24-14, July 15, 2024
(1)
Introduction.
A transfer of real property is exempt from the real
				estate excise tax if it consists of a mere change in identity or form of
				ownership of an entity. This exemption is not limited to transfers involving
				corporations and partnerships, and includes transfers of trusts, estates,
				associations, limited liability companies and other entities. If the transfer
				of real property results in the grantor(s) having a different proportional
				interest in the property after the transfer, real estate excise tax
				applies.
(2)
Qualified
				transactions.
A mere change in form or identity where no change in
				beneficial ownership has occurred includes, but is not limited to:
(a) The transfer by an individual or tenants
				in common of an interest in real property to a corporation, partnership, or
				other entity if the entity receiving the ownership interest receives it in the
				same pro rata shares as the individual or tenants in common held prior to the
				transfer. See also WAC
				458-61A-212,
				Transfers where gain is not recognized under the Internal Revenue
				Code.
(b) The transfer by a
				corporation, partnership, or other entity of its interest in real property to
				its shareholders or partners, who will hold the real property either as
				individuals or as tenants in common in the same pro rata share as they owned
				the corporation, partnership, or other entity. To the extent that a
				distribution of real property is disproportionate to the interest the grantee
				partner has in the partnership, it will be subject to real estate excise
				tax.
(c) The transfer by an entity
				of its interest in real property to its wholly owned subsidiary, the transfer
				of real property from a wholly owned subsidiary to its parent, or the transfer
				of real property from one wholly owned subsidiary to another.
(d) The transfer by a corporation,
				partnership or other entity of its interest in real property to another
				corporation, partnership, or other entity if the grantee owner(s) receives it
				in the same pro rata shares as the grantor owner(s) held prior to the
				transfer.
(e) Corporate mergers and
				consolidations that are accomplished by transfers of stock or membership, and
				mergers between corporations and limited partnerships as provided in chapters
				25.10 and 24.03A RCW.
(f) A
				transfer of real property to a newly formed, beneficiary corporation from an
				incorporator to the newly formed corporation, provided:
(i) The proper real estate excise tax was
				paid on the original transfer to the incorporator; and
(ii) It was documented on or before the
				original transfer that the incorporator received title to the property on
				behalf of that corporation during its formation process.
This tax exemption does not apply to a transaction in which a
				  property owner acquires title in his or her own name and later transfers title
				  to the corporation upon its formation.
(g) A transfer into any revocable
				trust.
(h) A conveyance from a
				trustee of a revocable trust to the original grantor or to a beneficiary if no
				valuable consideration passes, or if the transaction is otherwise exempt under
				this chapter (for example, a gift or inheritance). A sale of real property by
				the trustee to a third party, or to a beneficiary for valuable consideration,
				is subject to the real estate excise tax.