Real Estate Investors & Developers Bookkeeping in Washington

Beyond sales tax, Washington entities have their own obligations — registration with the Washington Secretary of State, and whatever annual entity-level tax or report the state imposes. No income tax, but the Business and Occupation tax applies to gross receipts by activity classification and is reported alongside sales tax. These are recorded as they accrue rather than discovered at year end.

Washington levies a real estate transfer or deed tax at closing, on top of recording fees and title charges. Each of those gets a different treatment — some capitalize into basis, some are deductible now — and drawing that line inconsistently across years is the single most common problem we find in investor books. Getting it right at closing is far cheaper than reconstructing it later.

The Washington statewide base rate is 6.5%. Local rates stack on top and are generally sourced to the delivery address, so the effective rate varies within the state. Getting sourcing right is what keeps the liability account matching what you actually collected.

Registering to do business in Washington runs through the Washington Secretary of State, with tax accounts through the Washington Department of Revenue and employer accounts through the Washington Employment Security Department. Washington treats these as wholly independent, so being in good standing with one says nothing about the others — and the sales tax account is the one that accrues a real balance while you are not looking.