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Rental property LLCs in Washington

Yes, you can hold a Washington rental in an LLC. You file a $180 Certificate of Formation with the Secretary of State and then a $70 annual report every year, due by the last day of the month the LLC was formed. The Washington catch is the real estate excise tax: a deed to your own LLC is exempt only if you qualify and claim the exemption on the county affidavit, and selling 50% or more of the LLC within 36 months is treated as a sale of the property. Seattle, Tacoma and Spokane each require a rental registration or business license, and Seattle limits how many short-term rental units an operator can license. Forming the LLC doesn't move your deed or stop a lender's due-on-sale clause.

Last checked 2026-10-24. General information, not legal or tax advice.

Local rental rules come first

Seattle. The Rental Registration and Inspection Ordinance (RRIO) requires most rental housing to register with the Department of Construction and Inspections (SDCI) as soon as there is a tenant. The fee is $126 for a property and its first unit plus $31.50 for each additional unit, includes a 5 percent technology fee, and covers two years. SDCI's Tip 620 defines the owner on the registration as "the person(s) or organization listed on the title," so ask SDCI how to update a registered property when title moves to your LLC. Each property is selected for inspection once in its first five years, with a 10 percent chance of a second selection in the next five, and penalties run $150 a day for the first 10 days and $500 a day after that (SDCI Owners & Managers page; Tip 620).

Seattle short-term rentals. They need two licenses: a Seattle business license tax certificate and an operator license from Finance and Administrative Services, $75 per unit and renewed every 12 months (Seattle Mun. Code § 23.42.060(C); FAS Short-Term Rentals page). The operator can be "a corporate entity such as an LLC," but the city caps units. Most operators may run two, their primary residence and one other. When a business entity is the operator, each principal "may have a property interest in no more than two short-term rental units," one of them that principal's primary residence or another principal's on the same license (FAS Director's Rule STR-1, SMC 6.600.030). A short-term rental that isn't your primary residence must also be RRIO-registered before you list it. The license has to be in the owner's name even if a manager runs the listing, and operating without one risks $500 for a first violation and $1,000 after that.

Tacoma. Renting residential property requires a city business license, and "One business license will cover all properties owned by the same legal entity." You register every rental property in Tacoma when you license and certify that each meets RCW 59.18.060, and the application must be in the name of the owner or entity on record with Pierce County, so the LLC is the name to apply under once the deed records. A three-year provisional rental property license, with an inspection certificate, is required for a property found substandard after a complaint, not for every rental (City of Tacoma Rental Business page, content current as of 08/11/26). Short-term rentals (under 30 days) are allowed in many areas. An owner who rents out the entire home need not live there, but renting individual rooms or a separate unit such as an ADU requires the owner to reside there, and all need a business license, plus a transient accommodation license for three or more rooms (Tacoma Permits short-term rental tip sheet; TMC 13.06.080).

Spokane. The code treats "owning, renting, or leasing real property located in the City of Spokane" as doing business, so every residential rental needs an annual city business license and a rental registration, and no one may rent or lease a unit to the public without registering it (Spokane Mun. Code § 10.57.020). The registration fee is the standard business registration fee (the code set it at $131 beginning January 1, 2024, adjustable each year) plus $15 per unit per year, with exemptions such as units occupied by a Housing Choice Voucher tenant (SMC 8.02.0206). It needs a declaration that each unit meets RCW 59.18.060 and expires December 31 of the year after registration or renewal. A landlord without the license and registration can't raise rent or evict until compliant. On ownership changes the code is split: § 10.57.020 says a registration is transferable to whoever acquires the property for the rest of its term, while SMC 8.02.0206 says the holder must notify the state business licensing service within 30 days and the new owner files its own application, so ask the city which applies to a deed to your LLC. Code Enforcement may inspect registered properties periodically with tenant consent or a warrant (§ 10.57.040). Short-term rentals need a separate permit, which requires a copy of the owner's current Spokane business license. In residential zones the code generally allows one short-term rental per single-family structure or ADU (both together only with owner occupancy) and no more than 20% of the units in a sprinklered multifamily or mixed-use building (§ 17C.316.040).

Statewide. A short-term rental is a dwelling rented for fewer than 30 consecutive nights. Its operator must remit all applicable local, state and federal taxes unless a platform does, give guests a contact, post the address, emergency numbers, floor plan and occupancy limit, and carry primary liability insurance of at least $1,000,000 in the aggregate or book every stay through a platform that provides at least that much (RCW 64.37.020, .030, .050). A home the owner occupies at least six months a year with fewer than three rooms rented isn't covered (RCW 64.37.010). For tenants, state law bars rent increases in a tenancy's first 12 months and caps later ones at the lesser of 7 percent plus the Seattle-area CPI or 10 percent in any 12 months. Exemptions include a unit whose first certificate of occupancy issued 12 or fewer years ago, and the owner-occupied exemptions don't apply when the owner is a corporation, a REIT or an LLC with at least one corporate member (RCW 59.18.700, .710).

Elsewhere in Washington. Rental rules are local. Ask your city and county before the first lease.

What the LLC protects, and what it doesn't

Washington's LLC Act says "no member or manager of a limited liability company is obligated personally for any such debt, obligation, or liability of the limited liability company solely by reason of being or acting as a member or manager" (RCW 25.15.126(1)). A member or manager can agree to be personally obligated, and "is personally liable for such person's own torts" (§ 25.15.126(2), (3)).

  • Guarantees still bind you. A personal guarantee you sign for a lender is your own agreement.
  • Your own torts are yours. A repair you make yourself, or your own negligence, isn't shielded by the LLC.
  • A court can still reach members. Members are personally liable "to the extent that shareholders of a Washington business corporation would be liable in analogous circumstances," though skipping member or manager meetings isn't a factor if the certificate of formation and LLC agreement don't require them (RCW 25.15.061). Ask a Washington attorney how that applies to you.
  • It isn't insurance. The LLC still needs coverage that pays claims and defense costs.

One LLC, or one per property?

Separate LLCs keep one property's judgment away from the others, at $180 to form and a $70 annual report for each LLC, plus a registered agent each. Washington has no series-LLC option that I could find: the word "series" doesn't appear anywhere in its LLC Act (chapter 25.15 RCW). So separate properties means separate LLCs. More: Should you have a separate LLC for each rental property?. Other states: All rental property LLC guides · Arizona · Texas.

Form it where the property is, or register there

The simplest setup is a Washington LLC for Washington property. An LLC from another state "must register with the secretary of state" before doing business in Washington (RCW 25.15.321) by filing a foreign registration statement, with a certificate of existence or good standing from its home state issued no more than 60 days earlier. The filing fee is $180 plus an online processing fee (SOS foreign LLC instructions). The state's nonexhaustive list of activities that don't count as doing business includes "Owning, without more, property" (RCW 23.95.520(1)(j)), but leasing isn't on that list, so ask a Washington attorney before you rely on it. An unregistered foreign entity can't "maintain an action or proceeding" in Washington until it registers and pays all fees and penalties for the years it did business, and it owes the fees it would have paid plus penalties (RCW 23.95.505(2), (5)). Failing to register doesn't impair its contracts or waive its liability limits (§ 23.95.505(6), (7)). That section also says the list doesn't decide what other Washington laws, such as tax or regulatory laws, can require (§ 23.95.520(4)), and Spokane's code, for one, treats owning or renting property there as doing business.

What it costs the state

  • Certificate of Formation: $180, plus an online processing fee whose amount the SOS page doesn't state (SOS fee schedule and online instructions; RCW 25.15.806)
  • Annual report: $70, which includes an online processing fee; due by the last day of the month in which the LLC was first formed and fileable up to 180 days before that date; a $25 delinquency fee is added if the LLC's status is "Delinquent" (SOS annual report instructions)
  • Initial report: due within 120 days of formation (RCW 23.95.255(1)); free when filed with the Certificate of Formation, $10 if filed separately within the 120 days (SOS LLC filing page and fee schedule)
  • Name reservation (optional): $30
  • Expedited service (optional): $100, generally processed within three working days
  • Foreign LLC registration: $180 plus an online processing fee
  • Reinstatement after administrative dissolution: $140 plus all missed annual report fees (SOS fee schedule)
  • Change of registered agent or office: no fee
  • EIN: free from the IRS

Compare services: LLC services compared.

Forming the LLC, in order

  1. Pick a name that contains "limited liability company," "limited liability Co.," "L.L.C." or "LLC" and none of "cooperative," "partnership," "corporation," "incorporated," "Corp.," "Ltd.," "Inc.," "LP," "LLP" and similar terms (RCW 23.95.305(5)). The name must also be distinct from names already on the Secretary of State's records. A $30 reservation holds one.
  2. Name a registered agent with a physical street address in Washington (no PO boxes) who has consented to serve (RCW 23.95.415(2); SOS online instructions). The LLC must keep one at all times (RCW 25.15.021(1)).
  3. File the Certificate of Formation online with the Secretary of State ($180 plus the online processing fee). It sets out the LLC's name, registered agent, principal office address (which needn't be in Washington) and who is executing it, and the LLC exists when the Secretary of State files it (RCW 25.15.071). The Secretary of State doesn't record operating agreements.
  4. File the initial report, which lists the governors and the nature of the business, within 120 days of formation, or with the certificate to skip the later fee.
  5. Write an LLC agreement (Washington's term for an operating agreement).
  6. Get an EIN and open the LLC's bank account.
  7. Apply to the Department of Revenue for a business license; a Washington LLC files with the Secretary of State first. The department says to register if, among other things, your gross income is $12,000 a year or more or you do business under a name other than your full legal name.
  8. Put the LLC's name and address in each lease or a posted notice (RCW 59.18.060) and register or license each rental with the city (above).

Forming the LLC doesn't move your deed

Putting your rental in the LLC takes a new deed. A conveyance "may be recorded in the office of the recording officer of the county where the property is situated," and one that isn't recorded is "void as against any subsequent purchaser or mortgagee in good faith and for a valuable consideration" whose conveyance is first recorded (RCW 65.08.070(1)). The county auditor records it, and the first page needs the grantor and grantee names, an abbreviated legal description and the assessor's parcel number (RCW 65.04.045).

  • The real estate excise tax (REET) comes first. Before the auditor will record a deed, the county treasurer must collect the tax and affix a verification of payment, or, if no tax is due, note that on the instrument (RCW 82.45.090(1)). The state rate is graduated: 1.1% of the portion of the price up to $525,000, 1.28% up to $1,525,000, 2.75% up to $3,025,000 and 3% above that. On January 1, 2027 the thresholds become $551,000, $1,551,000 and $3,051,000 (RCW 82.45.060; Department of Revenue). The local rate is added on top: 0.50% in Seattle, Tacoma and Spokane, and mostly 0.25% or 0.50% elsewhere (Department of Revenue local rate table, effective May 1, 2026). The seller owes it (RCW 82.45.080).
  • A deed to your own LLC is exempt only if you qualify and claim it. The law excludes from "sale" a transfer that is "a mere change in identity or form of ownership of an entity where there is no change in the beneficial ownership" (RCW 82.45.010(3)(p)). The Department's rule says this covers limited liability companies and gives the test: if the grantors end up with "a different proportional interest in the property after the transfer," the tax applies (WAC 458-61A-211(1)). Three joint tenants deeding to their LLC in the same shares are exempt; the department's example of two owners of 50% each who deed to an LLC split 80/20 is not (WAC 458-61A-211(3); Department of Revenue). A transfer to an entity wholly owned by you, your spouse or domestic partner, or your children is exempt even if the proportions change. But the tax on the original transfer comes due if the entity later sells the property, or an owner transfers an interest outside that family group, within three years and the tax on that later transfer goes unpaid for 60 days (WAC 458-61A-211(5); RCW 82.45.010(3)(p)).
  • File the affidavit. Even an exempt deed needs a REET affidavit filed with the deed at the county treasurer. To claim an exemption, the affidavit must cite the WAC number, section and subsection and briefly describe it, with the parcels' current assessed values (WAC 458-61A-303(7); Department of Revenue). The state adds a $5 technology fee, plus a $5 processing fee when an exemption is claimed, with a $10 minimum. The department says exemptions are subject to audit for up to four years and that its REET team can't pre-determine taxability, so unsure owners can request a written ruling.
  • Selling the LLC later can trigger the tax. A "sale" includes the transfer, for value, of a "controlling interest" in an entity that owns Washington real estate within any 36-month period, and a controlling interest is 50% or more of its capital, profits or beneficial interest (RCW 82.45.010(2)(a), .033). The return is due within five days of the transfer (Department of Revenue), and the LLC's annual report asks about it. Entities that own Washington real estate must disclose a transfer of a controlling interest, or of an interest that amounts to at least one-third of one, and failing to report can add penalties (RCW 43.07.390, 82.45.220).
  • The county charges a recording fee, plus state surcharges. These include $183 per instrument (RCW 36.22.250) and a $100 covenant homeownership assessment (RCW 36.22.185). King County's Recorder lists $303.50 for "All other documents" plus $1 for each additional page. Check your county auditor's schedule.

Have a Washington attorney prepare the deed and the affidavit. After it records, update leases, rent payment instructions, deposits and insurance, and re-apply for the city licenses in the LLC's name.

Check the mortgage before you transfer

Federal law lets a lender enforce a due-on-sale clause, and a transfer to an LLC isn't one of the exceptions for 1–4 unit homes (12 U.S.C. § 1701j-3(d)). Fannie Mae allows a transfer to an LLC the borrower controls for loans it acquired on or after June 1, 2016 (Fannie Mae Servicing Guide D1-4.1-02). Ask your servicer in writing.

Insurance and taxes

Tell your insurer before title moves. A short-term rental needs at least $1,000,000 of primary liability coverage, or bookings through a platform that provides it, and platforms must warn operators that their personal insurance policy on the dwelling might not cover short-term rental stays (RCW 64.37.040, .050). For federal income tax, a single-member LLC is disregarded unless it elects corporate treatment (IRS). Washington doesn't currently have an individual income tax, but a 9.9% tax on adjusted gross income over $1 million starts January 1, 2028 (Department of Revenue).

  • Long-term rent isn't subject to B&O or sales tax. The Department of Revenue says renting real estate isn't subject to business and occupation tax or retail sales tax, if there is a landlord/tenant relationship, the tenant has exclusive use and possession, and the rental period is one complete month or 30 days or longer.
  • Short-term rentals are taxed. For stays under 30 days, owners collect and pay retail sales tax on the rental charges, lodging and convention and trade center taxes depending on location, and any retailing B&O tax after the small business credit. The department assumes you are in business if you advertise through an online marketplace or hire a property manager. Some marketplaces collect on a host's behalf, but check your contract, because you may still have to register and report.

Keeping each LLC in good standing

  • File the annual report ($70) by the last day of the month the LLC was formed. The Secretary of State sends a reminder 30 to 90 days before, but a missed reminder doesn't excuse the report (RCW 23.95.255(7)). The report includes a Controlling Interest section "required by the Department of Revenue."
  • A late annual report adds a $25 delinquency fee. The Secretary of State may start administrative dissolution if the report is more than 120 days late, if a fee isn't paid, or if the LLC has no registered agent for 30 consecutive days, and the LLC must cure within 60 days of the notice (RCW 23.95.605, .610). A dissolved LLC may only wind up or apply for reinstatement, and it can reinstate within five years by paying the missed annual fees and a penalty (§ 23.95.615).
  • Keep the registered agent current; changes carry no fee.
  • Renew city registrations on their own clocks: Seattle RRIO every two years and its short-term rental license every 12 months, Spokane's rental registration by its December 31 expiry, and Tacoma's annual business license (TMC 6B.20).
  • If your deed relied on the family-entity exemption, don't sell the property or move LLC interests outside the family within three years without checking the REET effect (WAC 458-61A-211(5)).

Before you file or transfer a property

  • Attorney: the deed, the REET exemption claim and affidavit wording, short-term rental rules
  • Servicer: is the transfer allowed?
  • Insurance agent: named insured, the $1,000,000 short-term rental coverage
  • CPA: B&O, sales and lodging tax registration, federal treatment
  • City: rental registration or business license, and any short-term rental license, in the LLC's name
  • Calendar: the LLC's formation month for the annual report; city renewals; the 36-month REET window

Form it with Corpus

Corpus prepares and files your Certificate of Formation and includes the first year of registered-agent service. The Washington page shows the current price. Corpus isn't a law firm: the deed, the REET affidavit, the loan, taxes and city licenses are separate steps.

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Sources

Last checked 2026-10-24. Corpus is not a law firm and does not provide legal or tax advice.