Washington State Form 1079: Filing, Deadlines, and Exemptions

Washington Form 1079, the REET Controlling Interest Transfer Return, is what you file with the state Department of Revenue when someone acquires a controlling stake in an entity that owns real property in Washington. Because the deal happens at the entity level (a stock purchase, a membership interest sale, a merger) there is no deed to record at the county, so the form is how the state collects Real Estate Excise Tax on the indirect transfer. You mail the completed return and payment to the Department of Revenue in Olympia, and the tax is due as of the transfer date itself.

When You Actually Have to File

Washington treats the transfer of a controlling interest in an entity holding in-state real property as a “sale” of that property for REET purposes. A controlling interest means 50 percent or more of the voting power of a corporation, or 50 percent or more of the capital and profits interest in a partnership, LLC, trust, or other entity.¹ The filing obligation attaches to the transfer that pushes cumulative acquisitions across that 50 percent line.

The state uses a 36-month look-back to catch deals done in pieces. Every transfer of ownership interest in the entity during the prior three years is added together, and when the total reaches 50 percent, REET is owed on the transfer that crossed the threshold. Acquisitions by persons acting in concert are aggregated even when the buyers are nominally separate; the Department looks at whether the purchasers negotiated as a group or whether each acquisition was genuinely independent.²

Information You’ll Need Before You Start

Form 1079 asks for identifying details about both sides of the transaction and every parcel of Washington real property the entity owns. Pull the following together first:

Legal names, Social Security numbers or federal EINs, and mailing addresses for both the transferor and the transferee.
The exact percentage of interest transferred, the effective date, and a description of how the interest was acquired (stock purchase, membership interest sale, merger, and so on).
For each parcel: the county, the tax parcel number assigned by that county’s assessor, and a brief property description.
The entity’s legal name, state of formation, type of entity, and a short description of its business activities.
The true and fair value of each parcel, determined using one of the methods described below.

The return is signed under penalty of perjury. Supporting documents (corporate minutes, stock transfer ledgers, purchase agreements, appraisals) don’t go in with the return, but keep them organized. If the Department audits the filing, those records are the first thing they will ask for.

How to Determine the Selling Price

This is the line that trips people up. The tax is measured by the “selling price,” which for a controlling interest transfer means the true and fair value of all Washington real property owned by the entity at the time the controlling interest changes hands. It is not the price paid for the stock or membership interest.³ A buyer might pay $2 million for 60 percent of a company, but if the company’s Washington real property is worth $5 million, the tax is calculated on the $5 million.

When true and fair value cannot be reasonably determined, the regulations allow two fallback methods: a fair market appraisal by a licensed appraiser, or an asset allocation agreed upon by buyer and seller under IRC Section 1060. If neither produces a reliable number, the county’s assessed value on the property tax rolls at the time of the transfer is used instead.³ Whichever method you use, keep the documentation; the Department may revisit the valuation on audit.

Calculating the Tax

The state REET uses a graduated rate structure, with rates ranging from 1.1 percent to 3.0 percent based on the selling price. The dollar thresholds separating the tiers are adjusted every four years, so pull the current schedule from the Department of Revenue’s REET page before you run the numbers.⁴ Each rate applies only to the portion of the selling price that falls within its tier, the same way federal income tax brackets work.

Local REET gets added on top. Each county and city sets its own local rate, and the Department publishes combined rate tables as downloadable files on its REET page.⁴ If the entity owns parcels in more than one county, calculate the tax for each parcel using the rates for that parcel’s location, then add the results.

A $5 state technology fee applies to every return regardless of the amount of tax owed.

Where to Send It and When It’s Due

For controlling interest transfers, payment goes directly to the Department of Revenue, not to the county auditor’s office that handles ordinary deed recordings.⁵ Mail the completed Form 1079 and payment to:

Washington State Department of Revenue
Taxpayer Account Administration
PO Box 47464
Olympia, WA 98504-7464

Make checks or money orders payable to the Washington State Department of Revenue. The tax is legally due on the date of the transfer.⁵ Penalties don’t start accruing until one month after the sale date, giving you a practical grace period, but the obligation itself runs from day one. Download the current version of the form from the Department’s forms and publications page at dor.wa.gov, and keep a copy of the completed return and proof of payment after you file.

Penalties and Interest if You File Late

If the tax isn’t paid within one month of the transfer, penalties stack quickly:⁴

One month late: 5 percent of the tax due.
Two months late: 10 percent of the tax due (total, not an additional 10).
Three or more months late: 20 percent of the tax due.

Interest runs from the transfer date on any unpaid balance. For 2026, the Department applies a 6 percent annual interest rate, calculated monthly, with a full month’s interest accruing at the start of each month.⁴ On a large transaction these charges add up fast. If the Department finds the failure to file was intentional tax evasion rather than an oversight, additional penalties under RCW 82.32.090 may apply.⁶

Exemptions Worth Checking Before You Calculate

Because the statute treats a controlling interest transfer as a sale, the exemptions available for ordinary real property sales under chapter 82.45 RCW also apply.¹ Three come up often:

A mere change in form or identity, such as merging a wholly owned subsidiary into another subsidiary of the same parent, may qualify as exempt under WAC 458-61A-211.
Transfers qualifying for nonrecognition of gain or loss under the Internal Revenue Code — entity formations, liquidations, certain reorganizations — may be exempt under WAC 458-61A-212.
A gift of stock is not counted when determining whether a controlling interest has been transferred, and a bank’s foreclosure on pledged corporate stock is treated as an exempt transfer.

If an exemption applies, you still file Form 1079; the return has a line for identifying the specific exemption. When there is real doubt about whether a transaction is taxable, you can request a binding written opinion from the Department of Revenue before closing.⁵

Federal Filings Form 1079 Doesn’t Cover

Filing Form 1079 handles the Washington REET side only. If the entity is a partnership, it must file IRS Form 8308 whenever a partner sells or exchanges an interest and any portion of the consideration is attributable to unrealized receivables or inventory items under IRC Section 751(a).⁷ Separately, an entity that undergoes a change in ownership or control may need to update its Beneficial Ownership Information report with FinCEN within 30 days of the change. These federal obligations run in parallel with the state filing; completing one does not satisfy the other.

1
Washington State Legislature. WAC 458-61A-101
2
Washington State Legislature. Washington Code RCW 82.45.010
3
Cornell Law Institute. Washington Administrative Code 458-61A-101
4
Washington Department of Revenue. Real Estate Excise Tax
5
Washington State Legislature. WAC 458-61A-301
6
Washington State Legislature. WAC 458-61A-306
7
Internal Revenue Service. About Form 8308, Report of a Sale or Exchange of Certain Partnership Interests