ITA

You may refer a buyer or seller to another firm or broker. As a result, you may receive a fee when the real estate transaction closes. The referral fee you receive is subject to business and occupation (B&O) tax under the Service and Other Activities classification.

Property located outside of Washington

If you receive referral fees related to real properties located outside of Washington, you may be able to use our apportionment formula to determine how much of your apportionable income is subject to B&O tax in Washington.

Real estate firms may hire photographers or videographers to help market their properties.

Generally, sales of digital photographs are subject to business and occupation (B&O) tax under the Retailing classification, and you must collect sales tax. However, you do not have to collect sales tax if the real estate firm provides a completed Digital Products and Remote Access Software Exemption Certificate.

Many real estate brokers hire sign posting businesses to setup and take down the signs on properties offered for sale. The broker typically owns their “for sale” signs, while the sign posting business owns the post on which the broker’s sign will hang. The sign posting business will dig a hole in the ground, temporarily install a post, and hang the broker’s sign on the post. Once the property is sold or the listing contract expires, the sign posting business will remove the post and sign, then backfill the hole.

Real estate appraisers assess the value of real property and provide a report of their findings. Real estate inspectors examine the condition of a home and/or building and provide a report of their findings.

Gross income for real estate appraisal services and real estate inspection services is subject to B&O tax under the Service and Other Activities classification. Retail sales tax does not apply.

Real estate businesses are subject to retail sales or use tax on the purchase of furniture, equipment, consumable goods, and retail services. Examples of purchases real estate businesses must pay sales or use tax on include, but are not limited to:

Real estate firms and other businesses may provide property management services to owners of residential or commercial properties. They are primarily responsible for renting or leasing properties, however they may also coordinate routine maintenance and minor repairs.

Gross income for property management services is subject to business and occupation (B&O) tax under the Service and Other Activities classification.

Everyone who uses personal property in a business (in Washington) must complete a personal property tax listing form. This listing must be filed with your county assessor’s office by April 30^th of each year. Examples of personal property used in conducting business include, but are not limited to:

Mortgage brokers generally work with home buyers to determine the type of mortgage they need and find a lender that matches those needs.

See our Mortgage brokers guide for information on the taxability of these services.

Real estate firms may charge brokers for providing space (desk fees) and other resources (shared expenses) such as telephones, advertising, multiple listing services, and office supplies. These charges may be a fixed amount per month or may be computed as a percentage of commissions or percentage of sales.

A real estate firm is a sole proprietorship, partnership, limited liability partnership, corporation, limited liability company, or other legally recognized business entity conducting real estate brokerage services in this state and licensed as a real estate firm.

Real estate firms are required to pay business and occupation (B&O) tax on the gross commission earned by the firm, including the commission paid to brokers (commonly referred to as agents), managing brokers, and designated brokers.