Deeds executed pursuant to court order in a partition suit by two persons who own land in undivided interests are transactions subject to the real estate excise tax.
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October 15, 1954
Honorable Murray E. Taggart Prosecuting Attorney Denny Building Walla Walla, Washington Cite as: AGO 53-55 No. 334
We have your letter of October 5, 1954, requesting our opinion as to whether the real estate excise tax applies to deeds exchanged, pursuant to court order in a partition suit, by owners in common of real estate.
It is our opinion that the real estate excise tax will apply to deeds executed by owners in common pursuant to a court order under a partition action.
A "sale" as defined in RCW 28.45.010 (1953 Supp.) includes:
"* * *any conveyance, grant, assignment, quitclaim or transfer of the ownership of or title to real property, including standing timber, or any estate or interest therein for a valuable consideration, and any contract for such conveyance, grant, assignment, quitclaim, or transfer, and any lease with an option to purchase real property, including standing timber, or any estate or interest therein or other contract under which possession of the property is given to [[Orig. Op. Page 2]] the purchaser, or any other person by his direction, which title is retained by the vendor as security for the payment of the purchase price." (Emphasis supplied)
The second paragraph of RCW 28.45.010 (1953 Supp.) provides exception to the "sale" rule. It provides that
"The term shall not include a transfer by gift, devise, or inheritance, a transfer of any leasehold interest other than of the type mentioned above, the assignment or other transfer of a vendor's interest in a contract for the sale of real property, even though accompanied by a conveyance of the vendor's interest in the real property involved, transfers by appropriation or decree in condemnation proceedings brought by the United States, the state or any political subdivision thereof, or a municipal corporation, a mortgage or other transfer of an interest in real property merely to secure a debt, or the assignment thereof, any transfer or conveyance made pursuant to an order of sale by the court in any mortgage or lien foreclosure proceeding or upon execution of a judgment, or deed in lieu of foreclosure to satisfy a mortgage, a conveyance to the federal housing administration or veterans administration by an authorized mortgagee made pursuant to a contract of insurance or guaranty with the federal housing administration or veterans administration, nor a transfer in compliance with the terms of any lease or contract upon which the tax as imposed by this chapter has been paid or where the lease or contract was entered into prior to the date this tax was first imposed, nor the sale of any grave or lot in an established cemetery, nor a sale by or to the United States, this state or any political subdivision thereof, or a municipal corporation of this state."
The statute does not exempt taxable transactions merely because they have been made mandatory by court order. To conclude otherwise would permit simple and [[Orig. Op. Page 3]] easy tax avoidance. Further, "taxation is the rule, and exemption is the exception," Spokane County v. Spokane, 169 Wash. 355, 358, 13 P. (2d) 1084 (1932), and tax statutes are strictly construed in favor of taxation and against exception or exemption. Norwegian Lutheran Church v. Wooster, 176 Wash. 581, 30 P. (2d) 381 (1934).
Therefore, the fact that the deeds here were executed pursuant to a court order does not eliminate the possibility that the transaction could be taxed.
An opinion of the attorney general, dated July 30, 1951, in answer to a similar request by Lawrence Hickman, Prosecuting Attorney of Whitman County, AGO 51-53 No. 98, indicates as follows:
"Deeds by which tenants in common partition land in accordance with their respective undivided interests are transactions subject to the real estate sales tax."
This opinion is contained in the November 1953, edition of Opinions of the Attorney General on Excise Tax on Real Estate Sales, at page 9. We are forwarding a copy of this pamphlet for your perusal.
Therefore we are of the opinion that the transaction here involved is a taxable transaction within the purview of chapter 28.45 RCW.