The Issue

The state budget faces a $3.2 billion shortfall because of overspending. To fill that hole, the state legislature may consider, as they have done in the past, an increase in the Real Estate Excise Tax (a sales tax collected on the sale of every home). Currently, the state collects 1.28% and local government collects .5% from every sale of property. Recently, there was a proposal for a local real estate tax increase that would add another .65% to the sale of property.

It's the tax you pay when you sell your home. Increasing real estate taxes means when you sell your home, you pay more - thousands of dollars more of your hard earned equity in your home!

Washington State already has one of the highest taxes on home sales in the nation. This tax will reduce the availability of affordable housing -- and would hit first-time homebuyers, middle income families and senior citizens at a time when our economy and the housing market has suffered. The experts say that housing is critical to our economic recovery.

This type of tax increase would take huge equity away from families on home sales, and will reduce home ownership in our state. Our home is a valuable investment we rely on. This investment must be protected! It would be a travesty for state government to tax our home equity to pay for the overspending in Olympia at a time when our economy is in trouble!

Points to Consider:

• With a $3.2 billion deficit to fill the state Legislature will have to consider new taxes - a sales tax on services, business tax, and/or a real estate excise tax increase (REET).
  
  
• There are recommendations from state and county task forces to raise the local real estate excise tax.
  • Climate Change, Puget Sound Partnership, and Regional Transfer of Development Rights have identified new REET revenue as a possible funding source for their programs. 
  • One county's affordable housing work group has made a recommendation for the same.
     
• It doesn't make sense to increase a tax that's already failing.
  • Revenue from the real estate excise tax has fallen by nearly 58% since last year.
  • Home sales are down at least 26% with 65,000 fewer homes sales in 2008 compared to 2007.*
  • Background: The 2008 REET tax collections were 57.4% less ($442.9 million) than FY 2007 (FY 2007 - $1,159,670,000; FY 2008 $716,680,000).  That means $29 million less for critical infrastructure (Public Works Assistance Account) and $406 million less for State General Fund. Number of reported sales declined 26% in FY 2008 compared to FY 2007, with over 65,000 fewer transactions in 2008 compared to 2007. (WA State Department of Revenue)
    
    
• REET takes money out of home-owners' pockets at a time they need it most - for retirement, for their children's education.
  • If a family sells its home for $300,000 and has $25,000 in home equity, the home tax of 1.78% of $300,000. That's a tax of 21 percent of the family's home equity. 
  • Even if the family has $50,000 in home equity, the home tax amounts to 11 percent of the investment you've made in your home.
    
    
• Any tax on homes would delay an economic recovery. A revitalized housing market is the key to our economic recovery.
  
  
• The REET is another property tax that double-taxes homeowners who've already paid their taxes.

	Click here to learn why a real estate tax increase is a bad idea
	Click here to see an analysis of the real estate tax by the Washington Research Council.
	Click here for a Citizen's Guide to WA State's Real Estate Excise Tax
	Click here to learn more about the state budget deficit.
	Click here for Frequently Asked Questions about a real estate tax increase.