WBPA Helps Win Fight to Remove Real Estate from Capital Gains Proposal

Posted By: Chester Baldwin 2021 Legislative Session , WBPA News ,

Following efforts by WBPA members and allies in the real estate industry, the Washington State Senate exempted all real estate from the capital gains income tax bill. The original bill would have enacted a 9 percent capital gains tax that could have applied to real estate sales other than single family, duplexes, and triplexes. 

 

WBPA has been working to aggressively oppose the capital gains tax on real estate. Last week, we sent an opposition letter signed by over 50 real estate organizations and companies explaining why all real estate must be excluded from the tax. The hard work and combined power of our industry made a huge impact and changed the bill.

 

Capital Gains taxes are likely illegal under the state constitution, which explicitly bans all income taxes. Yet, the proposal continues to move forward. Knowing the likelihood that the bill could become law, despite concerns over its legality, WPBA had to mobilize to protect the housing, commercial, and retail real estate sectors.

 

WBPA will continue to monitor and engage in the conversation about capital gains taxes to ensure that real estate continues to remain out of the bill as it moves through the legislature.

 

Summary of all Recent Changes to SB 5096 in Amendment 

  • Exempts all sales or exchanges of real estate;
  • Lowers the tax rate from 9 percent to 7 percent;
  • Increases threshold exclusion to $250,000;
  • Replaces sole proprietor deduction with a family-owned small business deduction;
  • Adds exemption for the value of goodwill received when a car dealership is sold; and
  • Deposits the first $350 million in revenues collected each year into the education legacy trust account and deposits the remainder into a new taxpayer relief account.