Washington State: Real estate exempted from capital gains legislation

The Washington State Senate has exempted all real estate from a recently proposed capital gains income tax bill, SB 5096. The original bill would have enacted a 9% capital gains tax on all residential dwellings with four or more units, including commercial office buildings, manufactured housing, condominiums, self-storage and retail. This new tax would be added on top of other increased taxes already going into effect

The Washington Business Properties Association (WBPA) submitted a letter of opposition to the measure signed by ICSC and more than 50 organizations and companies.

Other changes to SB 5096 in the recent amendment are as follows:

• Exempts all sales or exchanges of real estate;
• Lowers the tax rate from 9% to 7%;
• 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.