Combined rate and how to defer it in Washington.
Washington has no general income tax, so most investment property sales face only the federal rate: up to 23.8% (20% federal + 3.8% NIIT, 0% state income tax). Washington's capital gains tax applies only to gains above $262,000 in a year, and to specific asset types; real estate sold through a 1031 exchange is excluded.
Washington has no general state income tax. The state's capital gains tax applies to gains above an annual threshold and excludes real property sold in a 1031 exchange. For most real estate sales, capital gains exposure is federal only. Estimate the federal bill with depreciation recapture in the capital gains tax calculator.
A 1031 like-kind exchange defers the federal capital gains rate and, for qualifying property, avoids Washington's capital gains tax as well. Model the exchange in the 1031 exchange calculator and get your deadlines from the timeline calculator.