1031 Exchange in Washington
1031 Exchange · Seattle
1031 Exchange in Seattle, WA
Puget Sound landlords exit appreciated rentals into passive DSTs — and Washington exempts real estate from its 7% gains tax.
$865,000Median value
-2.5%Year-over-year
4.5–5.5%Illustrative cap rate
Deferring the tax on a Seattle sale
A 1031 exchange lets Seattle investors sell appreciated real estate and reinvest into like-kind replacement property — commonly a Delaware Statutory Trust — deferring federal and Washington capital-gains tax while moving from active landlording to passive, institutional real estate.
Frequently asked questions
Does Washington's 7% capital gains tax apply when I sell real estate?
No. Washington's 7% long-term capital gains excise tax (RCW 82.87) specifically exempts direct sales of real estate. A property sale is taxed only at the federal level — up to 23.8% on the gain — which a 1031 exchange can defer.
Does Washington have a state income tax?
No. Washington has no personal income tax. The only state-level tax on investment gains is the 7% excise tax, and real estate is exempt from it.
Should I still do a 1031 exchange in Washington?
Yes — to defer the federal tax (up to 23.8%) and shift from active management to passive, institutional real estate while keeping your full equity invested.
Considering a 1031 exchange in Seattle?Talk to an advisor