Comments on: Is Excise Tax Payable on Short Sale Debt Forgiveness? http://raincityguide.com/2009/01/10/is-excise-tax-payable-on-short-sale-debt-forgiveness/ Seattle's Leading Resource for Real Estate Information Sun, 08 Nov 2009 01:47:42 -0800 http://wordpress.org/?v=2.8.4 hourly 1 By: Should builders and banks receive an excise tax exemption as WA State faces a budget deficit? | Rain City Guide http://raincityguide.com/2009/01/10/is-excise-tax-payable-on-short-sale-debt-forgiveness/#comment-333111 Should builders and banks receive an excise tax exemption as WA State faces a budget deficit? | Rain City Guide Thu, 29 Jan 2009 05:28:28 +0000 http://raincityguide.com/?p=3915#comment-333111 [...] Revenue just finished wiping the egg of its face for trying to smack down our short-sale sellers, threatening to collect excise tax on debt forgiveness. Everyone’s looking for money.  We’re facing a state budget deficit. All tax exemptions [...] [...] Revenue just finished wiping the egg of its face for trying to smack down our short-sale sellers, threatening to collect excise tax on debt forgiveness. Everyone’s looking for money.  We’re facing a state budget deficit. All tax exemptions [...]

]]> By: Kary L. Krismer http://raincityguide.com/2009/01/10/is-excise-tax-payable-on-short-sale-debt-forgiveness/#comment-332266 Kary L. Krismer Wed, 14 Jan 2009 22:06:16 +0000 http://raincityguide.com/?p=3915#comment-332266 Not necessarily. Many short sales are from refinancing well above the amount originally paid. But the prior sale really shouldn't play a factor in the amount of tax for the current sale. There was one high rise building in downtown Seattle that sold twice last year. They didn't offer a discount because they'd already collected 2.7% on it already. ;) Not necessarily. Many short sales are from refinancing well above the amount originally paid. But the prior sale really shouldn’t play a factor in the amount of tax for the current sale.

There was one high rise building in downtown Seattle that sold twice last year. They didn’t offer a discount because they’d already collected 2.7% on it already. ;)

]]> By: ARDELL http://raincityguide.com/2009/01/10/is-excise-tax-payable-on-short-sale-debt-forgiveness/#comment-332262 ARDELL Wed, 14 Jan 2009 21:28:17 +0000 http://raincityguide.com/?p=3915#comment-332262 Bottom line, Kary...they are not taxing it, nor should they have every tried. They got paid on that when the currrent owner bought it. Bottom line, Kary…they are not taxing it, nor should they have every tried. They got paid on that when the currrent owner bought it.

]]> By: Rhonda Porter http://raincityguide.com/2009/01/10/is-excise-tax-payable-on-short-sale-debt-forgiveness/#comment-332260 Rhonda Porter Wed, 14 Jan 2009 20:01:26 +0000 http://raincityguide.com/?p=3915#comment-332260 Jillayne, I'm so glad you were able to write about this topic AND that DOR wised up. It's the last thing our industry would need right now...a bunch of liens popping up on homes that were short sales for the difference of the sales price/forgiven loan amount. I know the State's hurting for revenue...but come on! Jillayne, I’m so glad you were able to write about this topic AND that DOR wised up. It’s the last thing our industry would need right now…a bunch of liens popping up on homes that were short sales for the difference of the sales price/forgiven loan amount.

I know the State’s hurting for revenue…but come on!

]]> By: Kary L. Krismer http://raincityguide.com/2009/01/10/is-excise-tax-payable-on-short-sale-debt-forgiveness/#comment-332258 Kary L. Krismer Wed, 14 Jan 2009 19:53:35 +0000 http://raincityguide.com/?p=3915#comment-332258 Ardell, go back and read posts 2 and 3 above. The sales price doesn't just include the cash paid--it also includes any debt against the property. What was tripping of the DOL wasn't the forgiveness of debt, it was the lien. The statute is ambiguous as to the time of the lien--whether it would be counted if it's released at time of sale, because it's "remaining on such property at time of sale" or some such thing (see main post for the language). Ardell, go back and read posts 2 and 3 above. The sales price doesn’t just include the cash paid–it also includes any debt against the property. What was tripping of the DOL wasn’t the forgiveness of debt, it was the lien. The statute is ambiguous as to the time of the lien–whether it would be counted if it’s released at time of sale, because it’s “remaining on such property at time of sale” or some such thing (see main post for the language).

]]> By: ARDELL http://raincityguide.com/2009/01/10/is-excise-tax-payable-on-short-sale-debt-forgiveness/#comment-332256 ARDELL Wed, 14 Jan 2009 19:39:53 +0000 http://raincityguide.com/?p=3915#comment-332256 This thread makes no sense to me. It's obvious that the sale price which is taxed via the excise tax has never had anything to do with the forgiveness. The conclusion that it is not taxed is a big "duh". What part of "sale price" was ambiguous? This thread makes no sense to me. It’s obvious that the sale price which is taxed via the excise tax has never had anything to do with the forgiveness. The conclusion that it is not taxed is a big “duh”. What part of “sale price” was ambiguous?

]]> By: tim http://raincityguide.com/2009/01/10/is-excise-tax-payable-on-short-sale-debt-forgiveness/#comment-332182 tim Wed, 14 Jan 2009 01:15:46 +0000 http://raincityguide.com/?p=3915#comment-332182 Kary, I know. I did think of the rebate brokers. All water under the bridge now. :) Kary, I know. I did think of the rebate brokers. All water under the bridge now.

:)

]]> By: Kary L. Krismer http://raincityguide.com/2009/01/10/is-excise-tax-payable-on-short-sale-debt-forgiveness/#comment-332172 Kary L. Krismer Wed, 14 Jan 2009 00:47:59 +0000 http://raincityguide.com/?p=3915#comment-332172 They do tax closing costs from seller to buyer, don't they? What about rebate brokers? I'd assume the money rebated is included in the sales price. But I think those are different issues to some extent, because the lien items wasn't there. They do tax closing costs from seller to buyer, don’t they?

What about rebate brokers? I’d assume the money rebated is included in the sales price.

But I think those are different issues to some extent, because the lien items wasn’t there.

]]> By: tim http://raincityguide.com/2009/01/10/is-excise-tax-payable-on-short-sale-debt-forgiveness/#comment-332169 tim Wed, 14 Jan 2009 00:41:32 +0000 http://raincityguide.com/?p=3915#comment-332169 Good. If they ended up doing this it would have resulted in much consternation. DOR would also then have go after all "consideration" taking place within a sale: reduced commissions (common) from agents going to seller, reduced escrow/title fees for sellers (builders etc), closing costs from seller to buyer which is "consideration" and so forth. Good. If they ended up doing this it would have resulted in much consternation. DOR would also then have go after all “consideration” taking place within a sale: reduced commissions (common) from agents going to seller, reduced escrow/title fees for sellers (builders etc), closing costs from seller to buyer which is “consideration” and so forth.

]]> By: Jillayne Schlicke http://raincityguide.com/2009/01/10/is-excise-tax-payable-on-short-sale-debt-forgiveness/#comment-332137 Jillayne Schlicke Tue, 13 Jan 2009 23:28:55 +0000 http://raincityguide.com/?p=3915#comment-332137 Official update, posted here in the comment section, as well as in the main body of this article: UPDATE January 13, 2009 Department of Revenue: “After receiving extensive input from interested stakeholders and industry representatives about the nature of these transactions, we have carefully reconsidered how real estate excise tax statutes apply to these unique transactions [short sales]….we now see that these short sales are distinguishable from other transactions involving the forgiveness of debt because the seller negotiates separately with the lender for any debt reduction/forgiveness, apart from the actual purchase and sale of the property. As a result, the loan forgiveness is not “paid or delivered in return for the sale” of the property, as required by RCW 82.45.030.” Margaret J. Partlow, Senior Policy Counsel, Dept of Revenue. (Hat tip Rhonda Porter and Kary Krismer.) Translation: We are not going to require sellers to pay excise tax on the debt forgiveness with a short sale. 40 representatives from escrow, title, real estate, attorney, and short sale faciliator companies showed up in Olympia to help educate the Dept of Revenue. Thank you, Escrow Association of Washington, for bringing this to our attention and taking on the state head to head. Official update, posted here in the comment section, as well as in the main body of this article:

UPDATE
January 13, 2009
Department of Revenue: “After receiving extensive input from interested stakeholders and industry representatives about the nature of these transactions, we have carefully reconsidered how real estate excise tax statutes apply to these unique transactions [short sales]….we now see that these short sales are distinguishable from other transactions involving the forgiveness of debt because the seller negotiates separately with the lender for any debt reduction/forgiveness, apart from the actual purchase and sale of the property. As a result, the loan forgiveness is not “paid or delivered in return for the sale” of the property, as required by RCW 82.45.030.” Margaret J. Partlow, Senior Policy Counsel, Dept of Revenue.

(Hat tip Rhonda Porter and Kary Krismer.)

Translation: We are not going to require sellers to pay excise tax on the debt forgiveness with a short sale.

40 representatives from escrow, title, real estate, attorney, and short sale faciliator companies showed up in Olympia to help educate the Dept of Revenue. Thank you, Escrow Association of Washington, for bringing this to our attention and taking on the state head to head.

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