Profile picture for a789877

Mortgage Assumption and State Tax Stamp

I am considering doing a mortgage assumption, in order to take my ex-wife off the mortgage.  Today I received the "estimate of fees" statement from the lender and was shocked to see that there is a "State Tax Stamp - Deed" for 6343.18.  I live in Washington State. 

A) I am wondering why I would have to pay tax on a house that I already own. Is it because the house is being "sold" from the two of us (partners) to just one of us (single owner)?

I am also hoping someone might have an idea of what options I might have to accomplish the same thing while avoiding this tax.  Namely, I want to keep my low rate (4% 30-year fixed) but remove my ex-wife.  I will consider refinancing, even if it means taking a slightly higher rate, if I can save myself from that tax.  Any ideas?

PS.  I'm not looking for advice about looking at the numbers in terms of monthly payments, the length of the loan, amounts going to principle/interest.  I am really looking for some tips about types of financing moves that may help me to not pay the state tax stamp.  Thanks in advance for suggestions! 
Mr. a78
  • July 23 2011 - Snohomish
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Answers (9)

Profile picture for wetdawgs
Washington friends who've refinanced in this situation have not ended up paying the transfer tax.  I have no clue about assumptions in this case.
  • July 23 2011
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speak with your settlement providor to get the  actual amount; often lenders will put worst/highest case in the GFE; however responsibility for collecting the correct amount lies with your settlement providor. You are in essense buying half the house from your ex-wife which could trigger a transfer tax though many states exempt that in cases like yours.;
  • July 24 2011
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I would call up a title company or your recorder's or assessor's office rather than relying on a mortgage company to say how much in transfer tax will be owed.

I agree with wetdawgs, I've had spouse's refinance off title in Washington state and there was no transfer tax triggered, so I would not assume you would have it in your situation, I would verify.

Snohomish County Recorder
  • July 24 2011
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This is one of the most interesting posts I have seen on Zillow. a789877, regardless of the state tax issue I would appreciate you posting once this is closed as I am very curious to know if you can achieve your objective by an assumption. Your question about paying taxes on a house you already own also prompts the question, How can one assume a loan they already own?
I can not answer your tax question but will tell you how it works in Ga. We have 2 hits, an intangible tax ( .3% x loan amt ) and if it's a purchase there is an additional tax, a transfer tax ( .1% x loan amt ). Here, if you are refinancing and making payments to the same lender that funded the original loan, you are exempt from the .3% tax. There is one other exemption I don't care to post :). There are a couple of things about an assumption, TOTAL fees are usually around $800-$1000. Is the fee sheet coming from your current lender? If so, you listed the state tax for over six thousand dollars, did you mean 6K or six hundred? How much do the total closing costs add up to? I suggest finding the HUD Settlement statement from the purchase and contact them to find out if the tax applies and if this is the same lender that funded the purchase, mention that too. BTW, what is the current loan balance?            
  • July 24 2011
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Profile picture for wetdawgs
Clay: the state tax in Washington state for selling a home is almost 2% (perhaps 1.78% but I don't recollect precisely) of the sales price of the home.   This is usually paid by the seller.    (Clearly this person isn't selling, but his value of $6000 is not out of line if he were selling).   This is not related to the loan balance.




  • July 24 2011
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Thanks Wetdawgs, that is stiff, they must not have a State Income tax in WA. The transfer tax here is also based on the sales price ( misspoke above) but it is only .1 x sales price. The $6343 figure led me to believe this was a very large loan but if it's in the $320K - $350K range and the tax will be applied again on an assumption, they should also look at doing a quit claim and refinancing. Would need to know the details of the existing loan, if it's an FHA loan, how many years are left, and how much equity exists if any. I would rather pay the 1.78 - 2 points to buying down a 15 year rate on a conventional loan than paying the same tax for a 2nd time, if there is equity. Credit qualifying for an assumption will be the same paperwork as getting a new loan. I still think you could go back to the original closing agent from the purchase and get answers as to having to pay the tax again on an assumption as well as other options.               
  • July 25 2011
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Profile picture for wetdawgs
You are right, there is no state income tax in WA
  • July 25 2011
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Profile picture for Countryside Flair
I seem to remember some revolutionary war about 238 years ago over stamp taxes... I too am doing an assumption from my ex-wife, who has no ownership in the home, but is on the mortgage.  Somehow, even after paying my yearly $1200 property tax... I'm supposed to pay almost $3000 for a county stamp tax, just to remove her name off a loan?  I'm so disgusted with Washington state!  First they steal our land, then they regulate our private property with 300' setbacks from puddles of water, then regulate any land with a endangered rodent, or endangered butterfly found nearby, they refuse to issue permits unless you are a wealthy developer, and then they TAX, TAX, TAX!
  • April 15
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CF, what you should be upset by is agents providing legal advice, and people from out of state answering questions about Washington state taxes.  Neither is a good idea.

You should review, RCW 82.45.010(3)(e).  

Note I would say more, but Zilllows filters won't tell me what words it doesn't like, and I'm tired of guessing.  The short answer will have to be consult an attorney.
  • April 16
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