Understanding the Washington Capital Gains Tax The capital gains tax in Washington applies specifically to net capital gains, which is the difference between the sale price of an asset and its original purchase price, plus any associated transaction costs. If the seller is a non-resident of Washington but sells real property located within the state, the buyer is legally obligated to withhold the tax, making compliance a shared responsibility between the buyer and seller.
Washington State Capital Gains Filing Requirements and Obligations
Responsibility for reporting and paying this tax falls on the individual seller or transferor of the asset. This creates a layered tax environment where residents must account for both systems when planning for the after-tax return on an investment.
Assets Subject to the Levy Not all profits from sales are captured by this tax; Washington law specifically targets gains from the sale or exchange of securities and certain real property. Securities include stocks, bonds, mutual funds, and similar interests, while real property generally refers to residential real estate, including interests in cooperative housing and timeshares.
Washington State Capital Gains Filing Requirements and Obligations
While a taxpayer may pay 20% to the federal government on a gain, they would also pay 7% to the state of Washington if their income exceeds the filing thresholds. The state defines a net capital gain as the excess of net long-term capital gains over net short-term capital losses for the tax year.
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