Overview of The Spousal Residence Exclusion
Washington state recently enacted some changes that may impact married couples and registered domestic partners. Under the new Spousal Personal Residence Exclusion, when a spouse/partner passes away on or after January 1, 2025, the decedent’s share of the family home in some situations will not count when determining whether the estate needs to file an estate tax return (RCW 83.100.050 and WAC 458-57-135).
This change is significant because as it stands in Washington, estates over a certain value, currently $2,193,000 for 2025, must file a Washington estate tax return. The new rule means that for many situations, excluding the value of the family home may help some avoid crossing the filing threshold. This new rule also simplifies life for many surviving spouses/partners by eliminating unnecessary work during a difficult time.
Eligibility for the Home Exemption
Many types of homes qualify as a family home beyond the traditional house. For example, mobile homes that are permanently setup, condos, houseboats, cabins on leased land, and even certain co-op properties may qualify.
Following are four requirements to qualify:
- At death, the decedent was married to the surviving spouse or domestic partner.
- The home must pass to the surviving spouse/partner.
- Both spouses/partners must have lived the home for at least six (6) months before the spouse/partner passes.
- After excluding the value of the family home, the remaining estate must be under $2,193,000 (for 2025).
Examples of Personal Residence Exclusion Calculation
Example A: No Filing Needed
Assume John and Mary (H&W) own $6 million in assets together ($3 million each). Their home is worth $1.8 million (John’s share: $900,000). When John passes away, everything goes to Mary.
- John’s share of the estate: $3,000,000
- Exclude John’s share of the home: -$900,000
- New total: $2,100,000
Since John’s estate falls below the $2,193,000 filing threshold for 2025, No need to file an estate tax return.
Example B: Still Need to File
Same scenario, but with more assets ($6.5 million total, so $3.25 million each). After removing the home value:
- $3,250,000 – $900,000 = $2,350,000
This is above the $2,193,000 threshold, so filing an estate tax return in WA is still required.
Impact of New Rule on Surviving Spouse and Tax Implications
For some, this new home exclusion means one less thing to worry about during what is often a very difficult time. By not having to include the family home, some surviving spouses/partners can often avoid complicated paperwork, unnecessary expense, and the stress of navigating tax forms. While this change does not stand to reduce taxes owed, it does remove a significant administrative burden for estates that would otherwise need to file an estate tax return. Remember though—if your estate is substantial, comprehensive planning with a qualified advisor remains one of your best strategies to help protect assets and minimize tax impacts.
