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Nathan Luce focuses his practice on representing buyers, sellers and lenders in acquisitions, dispositions, development, and financing of commercial, retail, multifamily, and condominium projects. He also has experience representing landlords and tenants in the drafting and review of leases for a wide range of commercial projects, including office buildings, shopping centers, restaurants, and retail stores.

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In addition to Washington’s real estate excise tax (REET), transferors of ownership interests in entities that own real property in Washington must also factor in Washington’s capital gains tax when making such transfers.  The Washington Supreme Court upheld the capital gains tax as a constitutional excise tax earlier this year. See Quinn v. State, 1 Wn.3d 453, 526 P.3d 1 (2023). The tax is a flat tax of 7% of all adjusted long-term capital gains over $250,000 allocated to the state. RCW 82.87.010.

Gains from the sale of real estate are generally exempt from Washington’s capital gains tax. RCW 82.87.050(1). The tax also does not apply to the sale or exchange of an interest in a privately held entity, if the gain or loss from such sale or exchange is attributable to real estate directly owned by such entity.  RCW 82.87.050(2). But what does this mean in the context of multi-tiered ownership structures, where a party desires to sell membership interests in a subsidiary that owns real estate?

Washington’s legislators had their eye on common interest communities (CICs) during the 2023 regular session, which ended on April 23, 2023. Three bills relating to or affecting CICs become effective on July 23, 2023. One became effective immediately. Here is a brief summary of the new laws.