Initiative 645 on the November Ballot: How Washington’s Millionaire Tax Debate Could Reshape Real Estate Decisions

Washington Initiative 645 real estate investors are watching the November ballot closely. The measure could repeal a future 9.9% tax on annual individual income over $1 million, but it would not eliminate every tax connected to owning, renting, developing, or selling property.

For investors, the practical question is not “Which side is right?” It is: How should you make sound real estate decisions while the rules remain unsettled?

What Initiative 645 Would Do

The official ballot title and summary for Initiative 645 describes the measure as repealing a 9.9% tax on annual individual income over $1 million.

It would also prohibit state and local governments from imposing taxes:

• On individual income
• On the receipt of individual income
• Measured by an individual’s income

The initiative defines income broadly for purposes of excise taxes as a gain or benefit measured in money and derived from an individual’s capital, labor, property, or another source.

That broad language creates legal and policy questions. It should not be read as automatically repealing every payroll-related tax, invalidating Washington’s capital-gains tax, or eliminating every tax connected to real estate. The exact effect would depend on the measure’s text, existing statutes, administrative interpretation, and potential legal challenges.

The official explanatory statement provides additional context about the current law and the proposed changes.

The Tax Is Not Being Collected Yet

Washington enacted ESSB 6346, also known as SB 6346, during the 2026 legislative session. The Washington Legislature’s bill summary identifies the law as establishing a tax on millionaires.

The tax is scheduled to apply beginning January 1, 2028. It is not currently being collected.

The official ballot materials explain that the law generally applies to income above the $1 million threshold, with deductions, credits, and other provisions affecting the final calculation. Investors should review the enacted law: not just campaign summaries: before making decisions about rental income, pass-through income, business income, or property-related transactions.

If Initiative 645 passes, the official fiscal impact statement assumes the tax would no longer take effect. If it fails, the tax remains scheduled under current law, subject to any future legislative or legal changes.

What the Official Fiscal Estimate Says

The official fiscal impact statement estimates that Initiative 645 would reduce state revenue by approximately $11.432 billion over state fiscal years 2027 through 2031.

The estimate includes impacts to the state general fund, federal general fund, and the Fair Start for Kids account. The statement also notes that the first impacted year for tax collections would be later than 2027 because the tax would apply to future income and the first payments would be due in 2029.

That number is an official fiscal estimate. It is not the same as a campaign claim, a prediction about the housing market, or a guarantee of what public programs would ultimately receive or lose. Future legislative decisions and economic conditions could also affect outcomes.

Initiative 645 Is Not the Same as Washington’s Capital-Gains Tax

Real estate investors should keep these issues separate.

Washington has an existing capital-gains excise tax on certain long-term capital assets. According to the Washington Department of Revenue’s capital-gains tax guidance, sales or exchanges of real estate are exempt from that existing state capital-gains tax.

The DOR guidance also identifies other exemptions and deductions, including certain assets connected to real estate entities when the gain is directly attributable to real estate owned by the entity.

That does not mean a real estate sale is tax-free.

Depending on the transaction, investors may still need to account for:

• Real estate excise tax
• Property taxes
• Federal taxes
• Business and occupation tax issues
• Recording fees and closing costs
• Entity-level obligations
• Insurance and operating expenses
• Potential tax treatment of income generated before the sale

Initiative 645 also does not automatically change every provision of Washington tax law. Investors should ask a CPA or tax attorney to review the specific property, ownership structure, basis, transaction type, and timing.

Could the Debate Affect Real Estate Decisions?

Possibly: but not in one simple way.

The debate may influence the timing of:

• Acquisitions
• Property dispositions
• Refinances
• Portfolio restructuring
• Relocations
• Estate planning
• Development exits
• 1031 Exchange planning

For example, a high-net-worth seller may want more certainty about future tax exposure before selling a portfolio or relocating. A developer may reassess a project with a long construction timeline and a sale planned after 2028. A landlord may compare selling now with holding for several more years.

But tax uncertainty is only one factor.

A property still needs to work based on its:

• Purchase price
• Basis and renovation plan
• After-repair value
• Rent and vacancy assumptions
• Capital expenditures
• Insurance
• Property taxes
• Financing costs
• Holding period
• Exit strategy

Tax strategy can shape the decision. It should not replace underwriting.

What Current Market Reporting Shows

A September 2 report from The Center Square described a loosening Washington housing market and increased luxury listings in parts of the Seattle area.

The report discussed tax and residency concerns as one factor in seller decisions, while also noting other influences, including mortgage rates, technology-sector layoffs, economic uncertainty, and delayed moves.

That distinction matters.

There is no verified proof of a mass exodus caused solely by the millionaire-income-tax debate. A listing tells you that someone decided to sell. It does not tell you why.

Investors should ask respectful, practical questions:

• Why is the seller moving?
• What is the preferred closing date?
• Is there another property involved?
• Does the seller need a short or flexible timeline?
• Are there known title, tenant, or property-condition issues?
• What terms matter besides price?

Then underwrite the property: not the headline.

Implications for Different Investor Strategies

Luxury properties

More luxury listings could create additional negotiation opportunities, especially when a property is dated, overpriced, or difficult for conventional buyers to finance.

However, high-end renovations carry high-end risk. Imported materials, specialized labor, longer marketing periods, and a smaller buyer pool can quickly reduce margins.

Rental portfolios

Landlords should compare the after-tax result of selling with the long-term cash flow from holding. Review rent growth, operating costs, debt terms, capital needs, depreciation, and the ownership structure with a professional.

Do not assume that a future income-tax repeal automatically makes every rental more profitable.

Development projects

Developers should model the full project timeline, including land acquisition, permits, construction, stabilization, refinancing, and disposition.

A tax change that affects the final exit may matter: but so will construction delays, interest costs, insurance, absorption, and buyer demand.

1031 Exchanges

A 1031 Exchange involves specific federal requirements and strict timelines. Initiative 645 does not eliminate the need for qualified intermediary guidance or proper exchange documentation.

If a tax-law change affects your timing decision, involve your CPA, tax attorney, and qualified intermediary before taking action.

How to Prepare Before the Vote

You do not need to predict the election to prepare intelligently.

1. Run three scenarios

Model:

• Base case: Current law remains in place
• Upside case: Initiative 645 passes
• Downside case: The property underperforms or the exit takes longer

2. Model different dates

Compare an acquisition, refinance, or sale in:

• 2026
• 2027
• 2028
• 2029 and later

Use realistic assumptions for rates, rents, selling costs, and holding expenses.

3. Review ownership structure

Ask a CPA or attorney whether your LLC, partnership, trust, or other ownership structure fits your investment and estate-planning goals. Do not restructure solely because of a headline or social-media post.

4. Maintain liquidity

Tax uncertainty is easier to manage when you have reserves. Keep enough liquidity for repairs, vacancies, insurance increases, delays, and potential tax obligations.

5. Keep the property analysis honest

Do not buy a property because you expect a tax law to change. Buy only when the deal makes sense under conservative assumptions.

Tax Planning and Acquisition Financing Are Separate Decisions

Fast capital can help when a viable property or motivated seller appears. Financing does not create tax eligibility and does not guarantee a profitable exit.

Intrust Funding offers Washington investors:

• Standard Loans: Property acquisition financing with 15–20% down at 12% annual interest
• Rehab Loans: Acquisition and renovation financing with 15–20% down at 12% annual interest
• Funding in as little as 48 hours
• No inspections or appraisals required for the lender process
• First draws available at closing
• In-house underwriting
• No income verification
• Local Washington lending experience since 2009

Rehab draws require only 10–15 progress photos, helping keep projects moving without waiting for third-party draw inspections.

Approval, asset eligibility, leverage, fees, terms, and timing vary by transaction. Investors should still complete independent inspections, title and insurance review, financial due diligence, and professional tax and legal review.

For a practical look at how speed can affect a competitive Seattle acquisition, read “Speed Matters: Why a 48-Hour Close Is Your Best Weapon Against Seattle’s Rising Rates”. You can also review our resources on cash buyers and Washington real estate and evaluating fast-moving opportunities during tax-law uncertainty.

What This Does Not Mean

Initiative 645 is important, but it does not mean:

• Lower taxes are guaranteed.
• A mass exodus from Washington has been proven.
• Every luxury seller is motivated by taxes.
• The existing capital-gains tax automatically disappears.
• Real estate sales become free of all taxes and closing costs.
• Investors can skip inspections, title review, or financial due diligence.
• A political prediction is a substitute for a tax plan.
• Local market fundamentals no longer matter.

The strongest investors prepare for multiple outcomes. They do not wait for perfect certainty: and they do not confuse speed with a shortcut around good judgment.

Final Takeaway

Initiative 645 could influence how some high-net-worth sellers, landlords, developers, and investors think about timing. But the market will continue to reward investors who analyze the actual property, understand the seller’s real needs, and protect their downside.

Run the scenarios. Review the tax questions with qualified professionals. Keep liquidity available. Then move when the deal makes sense.

For complimentary deal analysis and courtesy underwriting, send the property to Intrust Funding. We’ll review the numbers with you.

Tax, Legal, and Political Disclaimer

This article is for general educational and informational purposes only. It is not tax, legal, accounting, investment, political, or financial advice, and it does not advocate for or against Initiative 645.

Tax laws, ballot measures, administrative guidance, and market conditions can change. The tax treatment of rental income, business income, property sales, entities, 1031 Exchanges, estate planning, and relocations varies by individual circumstances. Consult a qualified Washington CPA, tax attorney, real estate attorney, qualified intermediary, and other appropriate professionals before making a decision.

Financing terms and availability are subject to approval and may vary by borrower, property, leverage, fees, and transaction structure.

Official and Current Sources

• Washington Secretary of State: Proposed Ballot Measure Information
• Official Initiative 645 Ballot Title and Summary
• Official Initiative 645 Explanatory Statement
• Official Initiative 645 Fiscal Impact Statement
• Washington Department of Revenue: Capital Gains Tax
• Washington Legislature: SB 6346 Bill Summary
• The Center Square: Seattle Housing Market and Tax-Exodus Debate