Was REET due when parents who joined title only to help their daughter obtain a mortgage later quitclaimed their interest to her without consideration?

Plain-English summary

The Washington Department of Revenue granted the REET exiting-title exclusion when parents quitclaimed their 50% record interest to their daughter after joining title only to help her obtain a mortgage.

The lender required the parents to co-sign and appear on title when the daughter bought the property. The daughter later refinanced in her own name, and the parents quitclaimed their interest to her. No money or other consideration passed, and the evidence showed that the daughter alone funded the down payment and mortgage payments.

The Department initially denied the exclusion because the mother later appeared as a co-owner on the daughter's bank account. On appeal, the parents produced the account-change card and bank statements showing that the mother was added six months after the property transfer. With no payment contribution before the deed and no consideration for leaving title, the facts matched WAC 458-61A-215's co-signer example. The petition was granted.

What this means for you

Family co-signers

Being placed on title solely because a lender requires it can qualify for the exiting-title exclusion when the co-signer later leaves title without receiving consideration. Intent and payment history matter.

Homeowners refinancing into one name

Keep the original loan conditions, refinance documents, quitclaim deed, bank statements, and evidence showing who made the down payment and mortgage payments.

Real-estate and tax professionals

Do not rely only on names appearing in later bank records. Align the evidence with the transfer date and test whether the added titleholder acted as a co-purchaser or only as security support.

Common questions

Q: Why did the parents' quitclaim deed avoid REET?

A: They entered title only as mortgage co-signers, contributed no purchase or mortgage funds, received no consideration, and left title after the daughter refinanced alone.

Q: Did the mother's later joint bank-account status defeat the exclusion?

A: No. New evidence showed she was added to the account about six months after the quitclaim transfer, so it did not prove she funded the property beforehand.

Q: Is every transfer from parents to a child exempt?

A: No. The exclusion is fact-specific. A parent who contributed to the purchase, paid the mortgage, held a beneficial ownership interest, or received consideration may have a taxable transfer.

Q: What does "consideration" include for REET?

A: It can include money, other value, services, and certain debt or encumbrances associated with the transfer. The determination found none passed to the parents here.

Citations and references

• RCW 82.45.010(1), (3)(i), .030(3), and .060 (sale, exclusion, consideration, and tax)
• WAC 458-61A-102(3) and -215, especially the parent co-signer example in subsection (2)(e)
• Det. No. 19-0037, 40 WTD 137 (2021) (consideration comparison cited by the determination)

Source

• Landing page: Washington Tax Decisions ZIP files
• Original PDF: 45WTD059.pdf
• Source archive: Volume 45 ZIP (member wtdvol45/45WTD059.pdf)

Original ruling text

Det. No. 23-0196, 45 WTD 059 (May 5, 2026)

59

Cite as Det. No. 23-0196, 45 WTD 059 (2026)
BEFORE THE ADMINISTRATIVE REVIEW AND HEARINGS DIVISION
DEPARTMENT OF REVENUE
STATE OF WASHINGTON
In the Matter of the Petition for Correction
of Assessment of
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DETERMINATION
No. 23-0196
Registration No. . . .

WAC 458-61A-215; RCW 82.45.010(3): REAL ESTATE EXCISE TAX –
EXITING TITLE EXCLUSION. The real estate excise tax does not apply to quitclaim deeds given for the sole purpose of clearing title if no consideration passes otherwise. In order for their daughter to obtain a mortgage loan to purchase a property, daughter’s parents went on title of the property, and intended only to act as co-signers, not as co-purchasers. Daughter later refinanced the property solely in her own name, and her parents quitclaimed their interest in the property. Daughter made all mortgage payments on the property prior to and after the transfer and did not otherwise give consideration. For these reasons, the quitclaim deed transaction was not a sale subject to real estate excise tax. Headnotes are provided as a convenience for the reader and are not in any way a part of the decision or in any way to be used in construing or interpreting this Determination. LaMarche, T.R.O. – Husband and wife . . . who shared title with their daughter on a real estate parcel that was later transferred to their daughter alone, assert that they were on title only to help their daughter to get a mortgage, and intended to act solely as co-signors. Grantors assert they are entitled to a clearing or exiting title exemption from Real Estate Excise Tax (REET) on the transfer. We grant the petition.1 ISSUE Under RCW 82.45.010(3)(i) and WAC 458-61A-215, are Grantors exempt from REET on their transfer of real property to their daughter on the grounds that they merely wished to exit title?

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Identifying details regarding the taxpayer and the assessment have been redacted pursuant to RCW 82.32.410.

Administrative Review and Hearings Division
P O Box 47460 Olympia, WA 98504-7460
dor.wa.gov Phone (360) 534-1335

Det. No. 23-0196, 45 WTD 059 (May 5, 2026)

60

FINDINGS OF FACT
[In May 2018,] . . . (Grantors) co-signed a mortgage with their daughter, . . . (Grantee) and one of the conditions of the loan was that they be on title on the underlying real property located in Washington state . . . (Property). County records indicate that prior to the transfer at issue here, Grantee and Grantors each held a 50 percent interest in the Property. On March 9, 2019, Grantors filed a REET Affidavit with . . . County for the transfer of their 50 percent interest in the Property to Grantee, and Grantee refinanced the Property in her own name. No money or other consideration passed between the parties at the time of sale. Grantors claimed a clearing or exiting exemption under WAC 458-61A-215(2)(e), indicating that their intention was to go on title simply as “co-signors” only, not as co-purchasers of the Property, and asserted they had not made any payments toward the downpayment or previous mortgage. The Department of Revenue’s REET Program audited the transaction. As part of the audit, the REET Program requested loan documents and other documents related to the transfer, as well as Grantee’s bank statements from . . . Credit Union. The REET Program found that Grantee’s mother was on the bank statements and was on the account as a co-owner, and for this reason concluded that Grantor had contributed to the payments on the Property prior to the transfer. On this basis the REET Program denied the exemption, and the Department issued an assessment on December 28, 2022, . . . totaling $ . . . , which consisted of $ . . . in REET, $ . . . in penalties, and $ . . . in interest. Taxpayers timely filed a petition for administrative review. After filing the petition, Grantor provided a copy of a document entitled “Account Change Card” for Grantee’s . . . Credit Union account, which indicated Grantee’s mother was not added to the bank account until September 15, 2019, approximately six months after the transfer at issue. Grantor also provided copies of bank statements showing Grantee’s mother was not listed on the bank statement prior to September 15, 2019, and indicating that the down payment and mortgage payments were made solely from Grantee’s bank account. ANALYSIS REET is imposed on each sale of real property in this state. RCW 82.45.060. The term “sale” includes “any conveyance, grant, assignment, quitclaim, or transfer of the ownership of or title to real property . . . for a valuable consideration.” RCW 82.45.010(1). “Consideration” includes the following:
[M]oney or anything of value, either tangible or intangible, paid or delivered, or contracted to be paid or delivered, including performance of services, in return for the transfer of real property. The term includes the amount of any lien, mortgage, contract indebtedness, or other encumbrance, given to secure the purchase price, or any part thereof, or remaining unpaid on the property at the time of sale. . . . WAC 458-61A-102(3); see also RCW 82.45.030(3). Certain exclusions exist from the definition of “sale,” one of which is the transfer of an interest in real property merely to secure a debt. RCW Administrative Review and Hearings Division P O Box 47460 Olympia, WA 98504-7460 dor.wa.gov Phone (360) 534-1335

Det. No. 23-0196, 45 WTD 059 (May 5, 2026)

61

82.45.010(3)(i). WAC 458-61A-215 (REET Rule 215), the Department’s rule that administers this statutory provision states: The real estate excise tax does not apply to quitclaim deeds given for the sole purpose of clearing title if no consideration passes otherwise. This rule does not apply to deeds executed for the purpose of adding persons to title, except in cases of persons added to title for co-signing security purposes only. REET Rule 215(1) (Emphasis added.) Grantors claimed the exemption example in REET Rule 215(2)(e) on the REET Affidavit, which states: (e) The parents described in (d) of this subsection who have been on title with their child are now issuing a quitclaim deed to Joseph to exit title. Joseph has now paid off or refinanced the mortgage in his name only. The parents’ intention was to go on title as “co-signors” only, not as co-purchasers of the property, and they have not made any payments toward the repayment of the loan. This transfer is exempt under this rule.2 Here, the date of the transfer was made on March 9, 2019, and Grantor wife was not put onto Grantee’s bank account until September 15, 2019, thus there was no commingling or joint ownership of funds as originally believed. No money from the transaction was given to Grantors (compare Det. No. 19-0037, 40 WTD 137 (2021)), and there is no evidence in the record that payments were made by Grantors on the original mortgage. Therefore, no consideration passed between the parties, and Grantors are entitled to the exemption in WAC 458-61A-215 and RCW 82.45.010(3). Accordingly, we grant the petition. DECISION AND DISPOSITION Taxpayer’s petition is granted. Dated this 31st day of October 2023.

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Administrative Review and Hearings Division
P O Box 47460 Olympia, WA 98504-7460
dor.wa.gov Phone (360) 534-1335