§12.7 - Transfers Involving Underlying Debt

• Jurisdiction: Washington

§12.7 TRANSFERS INVOLVING UNDERLYING DEBT

The real estate excise tax applies to a transfer when the "grantee relieves the grantor from an underlying debt on the property or makes payments on the grantor's debt." WAC 458-61A-103(1). A transferor is personally liable for the debt if the lender may obtain a judgment against the transferor if the value of the property is insufficient to pay the debt, i.e., recourse debt. The selling price includes the amount of recourse debt even if the purchaser merely takes the property subject to the recourse debt. AGO No. 57-59-11; Det. No. 89-229, 7 Wn. Tax Dec. 308-1 (1989); see WAC 458-61A-103(1). In Det. No. 89-229, 7 Wn. Tax Dec. 308-1 (1989), a creditor forgave a debt in exchange for a quitclaim deed to the real property. The property had an underlying deed of trust that the...