The Washington State Legislature has enacted important changes affecting real estate recording fees and taxes in 2025. New surcharges and tax rules will impact how much it costs to record property documents (like deeds and liens) and how real estate transactions are taxed. Below we break down the updates by general statewide changes, individual impacts, business impacts, and estate tax changes – including reminders of key updates from the past two years. This comprehensive overview will help you plan for higher recording fees, updated excise tax rates, and new estate planning considerations.
By the Law Office of Theresa Nguyen, PLLC – keeping you informed on Washington’s real estate and tax law changes.
Recording surcharges have significantly increased for most real estate documents statewide. As of January 1, 2024, the standard recording fee for documents (deeds, easements, etc.) rose by $100 – bringing the total first-page recording fee to $303.50 in all Washington counties. This steep fee (plus $1 for each additional page) includes numerous state and local surcharges that fund housing programs, homeless prevention, and document preservation. For example, a $183 housing affordability surcharge and a $100 Covenant Homeownership surcharge now apply to most recordings. These surcharges were added by recent laws to generate revenue for affordable housing and down-payment assistance programs. Bottom line: recording a real estate document now costs over $300 for the first page statewide.
Exceptions at lower cost remain in limited cases: Documents like birth, marriage, or death records and government liens have nominal recording fees (around $18 or less) and are exempt from the housing surcharges. A standard deed of trust (mortgage) is slightly higher at $304.50 due to an extra $1 archive fee. These base fees and exemptions apply uniformly to all counties under RCW 36.18 and 36.22. Aside from these few exceptions, every recorded real estate instrument carries the full array of surcharges.
House Bill 1858 eliminated a long-standing fee exemption for certain loan documents. Assignments or substitutions of previously recorded deeds of trust (which transfer a mortgage from one lender to another) used to be exempt from many surcharges and cost only $18 to record. Starting July 27, 2025, those documents will cost $301.00 for the first page. In other words, lender and trustee documents are losing their fee discount and will now incur nearly the full standard recording fee. The only surcharge still waived for these documents is a small $2.50 planning fee, so the new $301 fee is just $2.50 shy of the $303.50 standard.
⚠️ All counties will charge $301 to record an assignment, appointment, resignation, or substitution of trustee for a deed of trust. If you’re refinancing or your loan is sold, expect higher recording charges passed on by the lender or title company. This change ensures even these documents contribute to state housing funds going forward.
Washington’s Real Estate Excise Tax (REET) is a state tax on property sales, separate from recording fees. No state REET rate changes took effect in 2025, but it’s worth remembering the graduated rate structure that began in 2020. The state tax rate depends on the property’s selling price:
1.10% on the portion of price up to $525,000
1.28% on the portion from $525,001 to $1,525,000
2.75% on the portion from $1,525,001 to $3,025,000
3.00% on any portion above $3,025,000
These tiered rates apply to all Washington counties for real estate sales. For example, selling a $600,000 home incurs roughly 1.1% on the first $525k and 1.28% on the remainder. High-value sales over $3.025 million see the top 3% marginal rate. (Notably, a 2023 proposal to add a 4% REET tier above $5 million was not enacted, so the top rate remains 3%.) In addition to the state tax, local REET of up to 0.50% is typically imposed by cities or counties – making the total tax on a sale range from ~1.60% up to ~3.50% in most areas. (One exception: San Juan County has an extra land bank tax, resulting in a 2.0% local REET.) REET is usually paid by the seller at closing and is collected by the county treasurer for the state and local governments.
New REET Exemption for Community Housing (Effective Jan. 1, 2026): Looking ahead, a recent law will exempt certain sales of affordable housing property from REET. Transfers of property to nonprofits or public housing agencies for qualified “community purpose” projects (such as affordable housing development, shelters, or community facilities) will be REEE-tax free starting in 2026. This incentive aims to reduce costs when property is conveyed for low-income housing or similar public benefit uses. Developers and nonprofits should document eligibility to claim this exemption on the REET affidavit when it becomes available.
While home buyers and sellers won’t face any new unique taxes in 2025, the existing fees and taxes can significantly affect closing costs:
Recording fees at closing: Whether you are a buyer recording a deed or a borrower recording a deed of trust, expect to pay over $300 in recording charges per document. These fees are typically itemized on your closing statement. The increase in standard recording fees (via the $100 housing surcharge in 2021 and the $100 covenant surcharge in 2024) means higher out-of-pocket costs when finalizing your home purchase or refinance. For buyers, this is a small portion of overall closing costs, but it’s good to budget for. For sellers, if you are recording instrument releases or other documents, those will incur the higher fees as well.
Excise tax when selling: Washington home sellers must pay the state/local real estate excise tax on the sale price (usually deducted from sale proceeds). Most typical home sales (under $525k) incur a 1.60% combined REET (1.1% state + 0.5% local). Higher-value home sales see progressively higher rates up to ~3.5%. This can amount to tens of thousands of dollars in taxes for luxury properties, so it’s crucial for homeowners to factor in REET when calculating net sale proceeds. (For example, selling a $800,000 home in King County would owe roughly $12,000 in state REET and $4,000 in local REET.)
No state capital gains tax on home sales: Washington’s new capital gains tax does NOT apply to real estate sales. So if you sell your personal residence or other real property, you won’t owe the 7% or 9.9% state capital gains tax on that transaction. (The state capital gains tax, which increased to a 9.9% top rate for 2025, targets sales of stocks, bonds, and other investments by very high-income individuals. Real estate is explicitly exempt.) This is good news for homeowners – you only need to consider federal capital gains tax on home sales (and many sellers qualify for the federal home-sale exclusion).
ℹ️ Tip for Sellers: If you’re selling an investment property or vacation home, remember that while Washington won’t tax your gain as income, you will owe REET on the full selling price. Strategies like 1031 exchanges (to defer federal tax) won’t avoid the excise tax. Plan your sale timing and proceeds with this in mind.
On a personal note, getting married just got more expensive in Washington – at least at the Auditor’s office. As of July 27, 2025, the marriage license application fee jumps from $72 to $172 statewide. This extra $100 was added by HB 1498 to fund domestic violence prevention programs. Couples planning to tie the knot after July 2025 will need to budget a bit more for the license. (If you apply before that date, you could still pay the lower fee.) While not directly related to real estate, this change comes from the same legislative updates affecting county auditors’ offices, which handle both recording and licensing functions.
Individuals should be aware that the steep recording fees are not just bureaucracy – they fund programs that may benefit the community. For example, the $100 “Covenant Homeownership Program” surcharge added in 2024 is earmarked to help rectify past housing discrimination by providing down payment assistance to eligible first-time homebuyers. The $183 homelessness/housing surcharge funds shelters, affordable housing projects, and landlord mitigation programs across Washington. In essence, whenever you record your property deed, part of your fee is contributing to affordable housing, homelessness prevention, and homeownership assistance initiatives. While this doesn’t lower your cost, it’s useful to know the policy purpose behind the fees.
✅ What You Can Do: As a homeowner or buyer, there isn’t much you can do to avoid these statutory fees and taxes. However, you can plan ahead to minimize surprises. Ask for an estimate of recording fees and taxes from your escrow agent early on. If you’re selling, consult a tax professional about federal capital gains implications (Washington’s own taxes are primarily the REET). And take advantage of any homebuyer assistance programs that these fees fund – for instance, if you qualify for down payment assistance or property tax exemptions, it can help offset other costs of homeownership.
Real estate industry professionals – particularly lenders, title companies, and escrow agents – will feel the impact of the recording fee changes. The removal of the fee exemption for deed of trust assignments means banks and servicers must now pay $301 to record assignments or substitutions of trustees. This will likely be passed on to borrowers or absorbed as a cost of doing business. Title and escrow companies handling closings need to update their fee schedules and software to reflect the new $301 charge on relevant documents effective July 27, 2025. There may be a surge of assignment recordings just before that date as lenders try to record under the old $18 fee, but after July 27 all new filings will incur the higher cost.
Business property recordings: Investors and businesses that record liens, leases, or other documents will also pay the higher fees. For example, a mechanics lien or a commercial lease memorandum will cost $303.50 for the first page. If your business regularly files documents (such as a builder filing liens or a county recording plats), budgeting for the increased recording expense is prudent. Multi-title documents (those that include multiple transactions in one instrument) incur the full fee for each transaction title – so recording a single document that does, say, an easement and a boundary line adjustment will be charged double first-page fees (exceeding $600 total). Businesses should separate transactions when possible to avoid unnecessary fees, or be prepared for the added cost.
For developers and investors, real estate excise tax remains a major cost in 2025. If you’re selling land or commercial property, the same graduated REET rates up to 3% apply as described above. One notable change: local governments now have more flexibility to use REET revenue for affordable housing projects (and some previous limits on using REET for housing were lifted). While this doesn’t change the tax you pay, it means cities and counties may start directing more of the existing REET 0.25%–0.50% towards housing initiatives rather than strictly infrastructure.
Additionally, a new local affordable housing REET exemption in 2026 (discussed earlier) could facilitate selling property to nonprofits or public agencies for development. If you’re a developer partnering with a housing authority or donating land for affordable housing, that transfer might be exempt from REET starting next year – a potential tax savings to factor into deal structuring.
Entity transfers: Some investors attempt to sell property by transferring an LLC interest (controlling interest transfers) to avoid excise tax. Be aware Washington has strict “controlling interest transfer” rules – a transfer of 50% or more of an entity that owns real property is subject to REET just like a deeded sale. The state extended the look-back period to 36 months to catch piecemeal transfers. These rules aren’t new in 2025, but it’s a reminder that creative deal structures won’t easily dodge the excise tax. Businesses should plan transactions accordingly and file the required affidavits within 30 days of any controlling interest transfer to avoid penalties.
Beyond real estate-specific fees, the 2025 legislature also increased Business & Occupation (B&O) tax rates for certain high-revenue businesses and added surcharges on large financial institutions. Most small to mid-size real estate businesses (brokers, property management firms, construction companies) will not be directly affected by the new surcharges unless their revenues are extremely high. However, professional service firms like large real estate consultancies or law firms will see a progressive B&O rate starting in 2025–2027 (e.g. 1.75% up to $5M revenue, 2.1% above $5M). If you’re a real estate professional or business owner, consult your CPA about any B&O tax category changes that might apply. Washington is shifting more tax burden to big corporations (through targeted surcharges up to 7.5% on the largest tech companies), which could indirectly impact sectors like commercial real estate if those companies tighten spending.
In summary, for most real estate investors and small businesses, the key changes are the increased transaction costs – higher recording fees and the steady REET obligations. Savvy investors will budget these into project costs. And if you engage in estate planning or succession planning for your real estate business, the estate tax changes discussed next are very relevant.
Significant changes to Washington’s estate tax take effect for decedents passing away on or after July 1, 2025. These changes (enacted in ESSB 5813) make the estate tax more progressive and will impact families with substantial real estate holdings and other assets:
Larger exclusion amount: The estate tax exclusion amount increases to $3,000,000 per person (up from $2.193 million) for those dying July 1, 2025 or later. This means the first $3 million of an estate is not subject to Washington estate tax. Many more moderately-sized estates will escape the tax entirely under this new threshold (previously, any estate over ~$2.2M was taxed; now only estates over $3M will be). Note: The exclusion will also be indexed to inflation each year going forward.
Higher tax rates on large estates: For estates above the exclusion, tax rates have increased across nearly all brackets. Washington estate tax rates now range from 10% up to a new top rate of 35% on the portion of estates far above the threshold. For example, amounts between $3M and $4M are taxed ~19%, $7M–$9M at 30%, and any portion beyond $9M at 35%. This is a dramatic jump from the previous top rate of 20%. Washington now has the highest state estate tax rate in the nation at 35%. Wealthy estates (especially those over $9M) will owe significantly more state tax than before – on top of the federal estate tax (40% top rate) if applicable. In the worst case, a large estate could face a combined ~60% marginal tax on the top end when adding state and federal.
Effect on real estate in estates: Real estate often makes up a big portion of an estate’s value. The increased $3M exemption is good news for families with a house and other assets totaling under $3M – they can now pass that on tax-free at the state level. However, estates with high-value real property (farms, commercial buildings, multiple investment properties) above the threshold will see higher taxes on the value above $3M. Washington continues to allow certain deductions, such as for family-owned businesses and farms, which were slightly expanded (the family business deduction rose from $2.5M to $3M). But beyond those, the steep new rates mean heirs of large real estate holdings could face large tax bills, potentially forcing sales of property. It’s more important than ever to get an accurate valuation of real property for estate tax purposes and explore strategies to minimize taxable estate value.
⚠️ Estate Planning Alert: If your net worth including real estate is nearing or above $3 million, these changes warrant a fresh look at your estate plan. Many more middle-class millionaires (for example, a couple with a paid-off home, retirement accounts, and life insurance) could approach the $3M mark. Proper titling between spouses, utilizing both spouses’ $3M exclusions, and strategic gifting during life can help avoid or reduce the state estate tax. The new law closed some loopholes (for instance, certain out-of-state trust strategies can no longer bypass Washington’s taxes), so it’s critical to use approved methods. Tools like credit shelter trusts, lifetime gifting of property (to lock in value below the threshold), family limited partnerships, and charitable trusts can all play a role in managing estate tax exposure.
It’s worth noting how Washington treats real estate at death aside from the estate tax:
No excise tax on inheritance: Transfers of property by inheritance or bequest are exempt from real estate excise tax. If you inherit a home or land, you do not pay the REET that a normal sale would incur. This hasn’t changed – it’s a longstanding exemption – but it’s a common question. The heir will typically record a certified copy of the death certificate and a lack of probate affidavit or personal representative’s deed to vest title, and only minimal recording fees apply (around $18 for the death certificate recording). No excise tax affidavit is needed for a pure inheritance transfer.
Federal step-up in basis: Also unchanged, but crucial for tax planning – inherited property gets a stepped-up income tax basis to the date-of-death value (for federal tax purposes). This means if heirs later sell the inherited real estate, they generally won’t owe capital gains tax on the appreciation prior to inheriting. With Washington’s new capital gains tax, remember that real estate sales are exempt from that tax, so selling inherited real estate in Washington has no state capital gains impact either. The main concern is the estate tax itself on large estates, not income tax on the inheritance.
In summary, Washington’s estate tax changes effective mid-2025 provide a mixed bag: a higher exemption (which is positive for moderately wealthy families) but sharply higher rates that will hit the largest estates containing significant real estate and other assets. Proactive estate planning is now even more important. This may include gifting properties to children while alive (using the federal gift tax exemption), purchasing life insurance to cover estate tax liabilities, or creating trusts to hold appreciating real estate. Each family’s situation is different – consultation with an estate planning attorney or tax advisor is highly recommended given these new laws.
Washington’s 2025 updates to recording fees, real estate excise taxes, and estate taxes create both opportunities and challenges for residents. Whether you’re buying or selling a home, managing real estate investments, or planning your estate, professional guidance can ensure you don’t pay more tax or fees than necessary – and that you leverage any benefits from the new laws. At the Law Office of Theresa Nguyen, PLLC, we assist clients across Washington with:
Real Estate Transactions & Closings: We review closing statements for accuracy, ensure REEE and recording fees are correctly applied, and advise on ways to structure transactions efficiently. Our team can help negotiate who pays certain fees and confirm all required documents (like REET affidavits or lien releases) are properly handled to avoid delays or penalties.
Tax Planning for Sales: If you’re selling a high-value property or an investment property, we provide guidance on minimizing taxes, such as timing sales to maximize capital gains exclusions or exploring 1031 exchanges for deferral. We also advise business owners on controlling interest transfers and the implications of Washington’s excise tax rules so you stay compliant.
Estate Planning & Asset Protection: Our estate planning attorneys specialize in protecting your home and real estate for the next generation. We can update your will and trusts to account for the new $3M Washington estate tax exclusion and higher rates. Strategies like credit shelter trusts, gifting real estate to heirs, family LLCs, and life insurance trusts can offset the impact of the 35% tax – we’ll tailor a plan that fits your family’s needs and takes advantage of both state and federal exemptions.
Homeownership Programs: Because part of your recording fees funds programs like the Covenant Homeownership account, we stay informed on the latest down payment assistance and homebuyer grants. We can connect first-time buyers to available programs that might make purchasing a home more affordable. Our goal is to help clients benefit from the very programs their fees support.
Navigating these changes on your own can be overwhelming. Our Renton-based firm has deep experience in Washington real estate and tax law. We keep up with the ever-changing statutes (like HB 1858 and ESSB 5813) so you don’t have to. Contact us for a consultation to ensure you’re fully prepared for the new recording fee regime, understand your tax obligations (and options) in any real estate deal, and have an estate plan that secures your legacy despite tax law changes. We’re here to provide clarity, strategic planning, and peace of mind amid Washington’s evolving legal landscape.
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