TAXATION ‑- REAL ESTATE SALES TAX ‑- ASSIGNMENT OF PURCHASER'S INTEREST IN CONTRACT TO CONVEY ‑- 'SELLING PRICE'

TAXATION ‑- REAL ESTATE SALES TAX ‑- ASSIGNMENT OF PURCHASER'S INTEREST IN CONTRACT TO CONVEY ‑- "SELLING PRICE"

Where a purchaser under a contract to purchase real property assigns his interest in said contract to another who assumes the original contractual obligation for payment of the unpaid balance, the measure of the Real Estate Sales Tax is the sum of the consideration paid or contracted to be paid to the assignee for said assignment plus the unpaid principal balance due on.

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                                                                  August 3, 1951

Honorable John C. Merkel
Prosecuting Attorney
Kitsap County
307 Dietz Building
Bremerton, Washington                                                                                                                Cite as:  AGO 51-53 No. 99

Dear Sir:

            We have your letter requesting our opinion on the following question:

            Where a purchaser under contract to purchase real property "assigns his interest in the contract and the assignee assumes the unpaid balance thereon," must he, as the assignor, pay the Real Estate Sales Tax measured by the unpaid balance on the contract as well as by the consideration received by him for such assignment?

            Our conclusion may be summarized as follows:

            Where a purchaser under a contract to purchase real property assigns his interest in said contract to another who assumes the original contractual obligation for payment of the unpaid balance, the measure of the Real Estate Sales Tax is the sum of the consideration paid or contracted to be paid to the assignee for said assignment plus the unpaid principal balance due on said assigned contract.

                                                                     ANALYSIS

             [[Orig. Op. Page 2]]

            Your question appears to be capable of answer by reference to the terms of the ordinance which imposes the tax.  The Real Estate Sales Tax is imposed by ordinance of the various counties as authorized by chapter 11, Laws of 1951, Ex. Sess. and is imposed upon each sale of any real property situated in the particular county at the rate of 1% of the selling price.  The term "sale" is given a comprehensive definition in the ordinance, and certainly includes a purchaser's assignment of a contract for the conveyance of real property.  The only question is the determination of the selling price for the computation of the tax.

            The term "selling price" is defined in the model ordinance in effect in most counties as follows:

            " 'Selling price' shall mean the consideration, in money or anything of value, paid or deliveredor contracted to be paid or delivered in return for the transfer of the real property or estate or interest therein * * *" (Emphasis supplied)

            Your question involves the situation where the assignee assumes the unpaid balance due.  That is, the assignee agrees with his assignor, if not also with the original vendor of the property, to pay the amount remaining due on the contract between his assignor and the vendor.  Under the above definition, the measure of the tax is defined to include the consideration paid or delivered or "contracted to be paid or delivered."  The consideration may take the form of payments running to the seller (the assignor) or to another; the entire amount would be a part of the "selling price" so long as such consideration is contracted to be paid.  By assuming the unpaid balance the assignee has contracted to pay such moneys.  Therefore, the unpaid balance of the original contract so assumed becomes a part of the measure of the tax under such circumstances.

            It is our opinion that the assignee of the purchaser's interest in a contract to convey real property is subject to payment of the Real Estate Sales Tax measured not only by the consideration paid or contracted to be paid by him to his assignor for that person's interest under the contract, but also by the principal balance due and remaining unpaid on the contract so assigned and agreed to be paid to the original vendor.

Very truly yours,

SMITH TROY
Attorney General

C. JOHN NEWLANDS
Assistant Attorney General