No Capital Gains Tax on Real Estate?

Question

Just wanted to confirm this is correct- in Washington state you no longer have to pay capital gains tax on real estate, regardless of how long you owned the property?

My husband and I are putting our new construction home on the market later this summer. Bought land back in 2019, finished building in 2022, listing in summer 2023.

Just wanted to make sure we wouldn't have an issue with capital gains tax.

Thanks for any advice!

Katie King · Answer

Thanks all for bringing more clarity to this! Sounds like I need to consult with a tax professional privy in real estate. If anyone has any recommendations please let me know!

Allan C. · Answer

@Katie King just want to make sure that you’re only thinking about the 7% state tax. Your federal capital gains obligation will remain regardless what your local state regulations say.

There are a handful of states that have 0 capital gains tax, and it seems WA may have some exclusions for RE (confirm with a specialist); however, state level tax is smaller than fed level.

Basit Siddiqi · Answer

Only applies to the state level.

Nathan Harden · Answer

This would be news to me. Last time I checked it was that you had to live in the property for 2/5 years. That would be HUGE if in fact they did change that!

Henry Clark · Answer

Talk with your tax accountant. There is a legal challenge on the law. There is an exemption for real estate. But since your selling within a year it might not qualify as long term capital gain thus does it meet the exemption. Basically you need a detailed discussion for a detailed response.

No Capital Gains Tax on Real Estate?

No Capital Gains Tax on Real Estate?

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