The short answer
- Transferring 50% or more of an entity that owns Washington real property within 36 months counts as a sale of that property
- Real estate excise tax is measured on the full value of the property, not the share you sold
- State rates are graduated, from 1.10% to 3.00%, plus local REET
- You report it on a Controlling Interest Transfer Return filed with the Department of Revenue
- It is due within five days of the transfer, with penalties and interest if late
In this guide
What REET Is
Washington charges real estate excise tax, usually called REET, when real property is sold. In an ordinary property sale it is paid through the county when the deed is recorded.
But a company that owns real estate can change hands without a new deed. The state closes that gap with the controlling interest rule.
The Controlling Interest Rule
If 50% or more of the interest in an entity that owns Washington real property is transferred or acquired, Washington treats that as a sale of the property.
For corporations, it's 50% or more of the voting power. For LLCs and partnerships, it's 50% or more of the capital, profits or beneficial interest.
Transfers are added together over a 36 month window. A series of smaller sales can cross the line together.
Tax on the Whole Property
The tax is measured on the full value of the real property the entity owns. It isn't reduced to match the percentage of the company you sold.
So if you sell 60% of a company that owns a $3 million building, REET is figured on the $3 million value of the building, not $1.8 million.
Selling the company that owns the building can cost as much in REET as selling the building outright.
The Rates
State REET is graduated. For 2026, the state tiers are:
- 1.10% on the portion up to $525,000
- 1.28% from $525,000 to $1,525,000
- 2.75% from $1,525,000 to $3,025,000
- 3.00% above $3,025,000
Local REET, usually 0.25% to 0.50%, is added on top. The thresholds rise on January 1, 2027.
Filing the Controlling Interest Return
A controlling interest transfer is reported on the Controlling Interest Transfer Return, filed with the Department of Revenue rather than the county. It can be filed online through My DOR.
The return is due within five days of the completed transfer. Interest and penalties apply if it's late, and penalties grow the longer it goes unpaid.
The purchase agreement should say which side pays. In Washington it is commonly the seller's cost, but it is negotiable.
When It Doesn't Apply
- An asset sale where the operating company leases its space and owns no real property
- Selling less than 50% of the entity, with no other transfers in the 36 month window
- Keeping the building in a separate entity you don't sell, and leasing it to the buyer
The last option is common. You keep the property and its rent, and the buyer gets a lease. It also keeps the real estate out of the business price.
Watch the 36 Month Window
Because transfers are added together over 36 months, partial sales add up. Selling 30% to a partner and later 25% to an investor can cross the 50% line together.
Annual reports to the Secretary of State also ask about ownership changes, so keep a record of every transfer. Your attorney can track the window for you.
If a sale is staged over several years, such as a buyout of a partner followed by a sale to an outside buyer, map out the REET effect of each step before the first one.
Your attorney can do that mapping in an afternoon.
Plan the Structure Early
Decide early whether the building goes with the deal, stays with you, or gets sold separately. Each choice changes REET, the price, financing and your taxes.
Real estate gains are outside Washington's capital gains tax, which our capital gains guide explains. Industrial owners in places like Kent run into this often.
This is general information, so confirm with your attorney and CPA. To start with a confidential estimate, use the price check form or call (206) 555-0171.