Of all the costs that surprise people selling a home here, the Washington real estate excise tax (REET) is the one out-of-state and first-time sellers ask about most. It's a tax on the sale of real property, the seller pays it, and on a typical Vancouver home it runs into the thousands of dollars — all settled at closing before you ever see your proceeds. This guide explains exactly how REET works in 2026: who pays it, the graduated state rate, Clark County's local add-on, the exemptions sellers ask about, and a worked example so you know your number before you list.
REET is just one line on a longer list of seller costs — for the full picture, see our breakdown of the cost to sell a home in Washington. Here, we go deep on the excise tax itself.
What REET Is and Who Pays It
The Real Estate Excise Tax is a tax on the sale of real estate in Washington, governed by RCW 82.45. It applies to nearly every transfer of real property for consideration — in plain terms, almost any normal sale of a house, condo, or land. And by statute, the seller pays REET (RCW 82.45.080). It is not customary or negotiable in the way some closing costs are; the law places the obligation on the seller.
Why it always gets paid: unpaid REET becomes a lien on the property (RCW 82.45.070). Because the tax attaches to the real estate itself, it has to be cleared before clean title can pass to the buyer. That's why your escrow company collects and remits it at closing as a matter of course — there's no way to "deal with it later." It comes straight out of your sale proceeds.
The Graduated State REET Rate
Since January 1, 2023, Washington's state excise tax has been graduated — and the structure is unchanged for 2026 (the brackets are next scheduled to be re-indexed January 1, 2027). The single most important thing to understand is that the rate is marginal: each rate applies only to the portion of the sale price that falls within its band, not to the whole price. This works just like federal income tax brackets.
Here are the current 2026 state REET brackets:
- Portion of the price up to $525,000: 1.10%
- Portion from $525,000.01 to $1,525,000: 1.28%
- Portion from $1,525,000.01 to $3,025,000: 2.75%
- Portion above $3,025,000: 3.00%
So a $700,000 sale is not taxed at 1.28% across the board. The first $525,000 is taxed at 1.10%, and only the remaining $175,000 is taxed at 1.28%. Misreading the brackets as flat is the most common mistake sellers make when they try to estimate their own excise tax. (One exception worth noting: qualifying agricultural land and timberland are taxed at a flat 1.28% rather than the graduated schedule.)
Local REET on Top of the State Rate
The state rate is only part of the bill. Cities and counties add their own local REET on top. In Clark County, the local rate is 0.50% — made up of two quarter-percent components (commonly called REET 1 and REET 2, each 0.25%). This 0.50% local rate applies in Clark County's unincorporated areas and in Vancouver, Camas, Battle Ground, Ridgefield, Washougal, and La Center. (Yacolt is the local outlier at 0.25%.)
Unlike the graduated state tax, the local REET is a flat percentage applied to the entire sale price. For a Vancouver-area home priced at or below $525,000, that means your combined rate is a clean 1.10% state + 0.50% local = 1.60% total. On pricier homes, the higher state brackets kick in on the portion above $525,000, while the 0.50% local rate still applies to the whole price. There's also a small affidavit processing fee of roughly $5.
Rule of Thumb for Clark County
For most Vancouver-area homes at or below $525,000, budget about 1.60% of the sale price for combined state and local REET. Above $525,000, your effective rate creeps up slightly because the second state bracket (1.28%) applies to the portion over that threshold. Always confirm the exact figure with your escrow officer for your price and city.
A Worked Example: A $550,000 Vancouver Sale
Let's run the numbers on a home priced right around the Clark County norm — $550,000. Because $550,000 crosses just over the first state bracket, this example also shows the marginal math in action:
- State REET, first bracket: 1.10% × $525,000 = $5,775
- State REET, second bracket: 1.28% × $25,000 (the portion above $525,000) = $320
- State subtotal: $5,775 + $320 = $6,095
- Local Clark County REET: 0.50% × $550,000 = $2,750
- Total REET: ≈ $8,845
That entire $8,845 is the seller's responsibility, deducted at closing. Notice that only $25,000 of the price was taxed at the higher 1.28% rate — the bulk was still taxed at 1.10%. That's the marginal structure working in your favor.
A Higher-Priced Example
The marginal effect is clearer on a larger sale. Take a $1,000,000 home:
- State REET, first bracket: 1.10% × $525,000 = $5,775
- State REET, second bracket: 1.28% × $475,000 (the portion from $525,000 to $1,000,000) = $6,080
- State subtotal: $5,775 + $6,080 = $11,855
- Local Clark County REET: 0.50% × $1,000,000 = $5,000
- Total REET: ≈ $16,855
Even at a million dollars, the first $525,000 is still taxed at the lowest 1.10% rate — only the amount above the threshold reaches the 1.28% band. Anyone who simply multiplies the whole price by 1.28% would overestimate the bill.
Exemptions Sellers Ask About
Washington recognizes a long list of REET exemptions under WAC 458-61A. The catch sellers most often miss is the difference between transferring a property and selling it. The following transfers are generally exempt because there's no true sale to a buyer:
- Inheritance / transfer to heirs — passing property by will, right of survivorship, a community property agreement, or a trust at death is exempt.
- Transfers between spouses in a divorce — moving title between the two spouses under a divorce decree or property settlement is exempt.
- Gifts — a true gift with no consideration (no money, and the recipient doesn't assume debt) is exempt.
Here's the crucial nuance: a normal arm's-length sale to a third-party buyer is fully taxable. The exemptions above cover the family transfer — not the eventual sale to an outside buyer. So if you inherit a house and then sell it to a buyer, that sale is taxable, even though the inheritance itself was exempt. Likewise, if a divorce decree awards you the home and you then sell it to a third party, that sale is taxable, even though the spouse-to-spouse transfer was exempt. The exemption follows the family transfer; the moment a real buyer and real money enter the picture, REET applies.
If your situation involves either of these paths, we cover the wider process in our guides to selling an inherited house in Washington and selling a house during a divorce.
Controlling-Interest Transfers
REET isn't limited to deeds. If real estate is held inside a company — an LLC, partnership, or corporation — Washington also taxes the transfer of a controlling interest in that entity. When 50% or more of an entity that owns Washington real estate changes hands within a 12-month period, REET applies as if the underlying property had been sold. This rule exists to prevent sidestepping the tax by selling "the company" instead of the building. It mostly affects investors and businesses rather than typical home sellers, but it's worth knowing the gap is closed.
How and When REET Is Paid
The good news: you don't have to figure any of this out yourself or write a separate check to the state. Your escrow or title company handles REET as part of closing. They prepare the Real Estate Excise Tax Affidavit, calculate the tax on your sale price, collect it from your proceeds, and remit it to the county treasurer at the time the deed is recorded. You'll see the figure itemized on your settlement statement.
Because REET comes out of your proceeds, it directly affects the number you walk away with. To see how it fits alongside commission, title, and your mortgage payoff, read our guide to net proceeds when selling a house in Washington.
REET Is Not the Same as Capital Gains Tax
Sellers often confuse the two. REET is an excise tax on the transaction and applies to essentially every sale. Capital gains tax is a tax on your profit — and Washington exempts the sale of real estate from its state capital gains tax, while most homeowners owe no federal capital gains either thanks to the primary-residence exclusion. We explain that fully in our guide to capital gains tax when selling a home in Washington — the tax you generally do not pay on your home.
A Quick Word on Accuracy
This is general information, not legal or tax advice — and excise tax rates and thresholds can change. The figures above are current as of 2026, but always confirm the exact rate for your sale price and city with your escrow officer or the Washington Department of Revenue, and consult a CPA or attorney about any exemption that might apply to your specific situation.
Want to know your real, all-in cost to sell — REET included — for your specific home? Request a free broker estimate and we'll prepare an itemized net sheet showing the excise tax, commission, title, escrow, and your projected net proceeds, so there are no surprises at the closing table.
Frequently Asked Questions
Who pays the real estate excise tax in Washington?
The seller pays the Washington real estate excise tax (REET) under RCW 82.45.080. It is collected at closing because unpaid REET becomes a lien on the property, so escrow clears it from your sale proceeds before you receive your net.
How much is the REET excise tax on a home in Vancouver, Washington?
For a Vancouver-area home priced at or below $525,000, the combined rate is about 1.60% — a 1.10% state rate plus a 0.50% local Clark County REET. On a $550,000 sale the total is roughly $8,845: about $6,095 in state excise tax (the graduated brackets) plus $2,750 in local REET. Confirm your exact figure with your escrow officer.
Is the Washington state REET rate the same on the whole sale price?
No. The state REET is graduated and marginal, meaning each rate applies only to the portion of the price within that band: 1.10% up to $525,000, 1.28% from $525,000.01 to $1,525,000, 2.75% from $1,525,000.01 to $3,025,000, and 3.00% above $3,025,000. The local REET, by contrast, applies as a flat percentage to the entire price.
Do you pay excise tax on an inherited house or a divorce transfer in Washington?
The transfer itself is often exempt — inheritance to heirs, transfers between spouses under a divorce decree, and true gifts with no consideration are generally exempt under WAC 458-61A. But a later sale to a third-party buyer is fully taxable, even if it follows a divorce decree or is made by an estate or heir.
When and how is REET paid at closing?
Your escrow or title company prepares the Real Estate Excise Tax Affidavit and remits the tax to the county when the deed is recorded. You do not file or pay it yourself — it is itemized on your settlement statement and deducted from your proceeds at closing.
Avenir Gedarevich
Avenir is the Designated Broker and Real Estate Agent of Vancouver Property Group, serving home sellers across Southwest Washington and Clark County. License #25011405.