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Real estate firms and other businesses may provide property management services to owners of residential or commercial properties. They are primarily responsible for renting or leasing properties, however they may also coordinate routine maintenance and minor repairs.
Gross income for property management services is subject to business and occupation (B&O) tax under the Service and Other Activities classification.
You are considered the consumer of any goods or retail services you buy in connection with providing property management services.
Deductions and exemptions
Management services for a housing authority
A deduction from B&O tax is available for gross wages, benefits, and payroll taxes paid to, or for, personnel performing on-site functions when received by:
- Nonprofit property management companies.
- For-profit property management companies working for a housing authority.
- For-profit property management companies working for a Limited Liability Company (LLC) or limited partnership (LP) if the sole managing member or sole general partner of the LLC or LP is a housing authority.
Examples of on-site functions include collecting rent, coordinating subcontractors, and property leasing. These services can be performed on site or from a central location.
You may take an “Other” deduction for qualifying amounts with a description such as “Property management under RCW 82.04.4274.”
Properties located outside of Washington
If you provide services associated with properties located outside of Washington, you may be able to use our apportionment formula to determine how much of your apportionable income is subject to B&O tax in Washington.
References
RCW 82.04.290 Tax on service and other activities.
RCW 82.04.4274 Deductions – Nonprofit management companies – Personnel performing on-site functions.
WAC 458-20-224 Service and other business activities.
WAC 458-20-19401 Minimum nexus thresholds for apportionable activities and selling activities.
WAC 458-20-19402 Single factor receipts apportionment – Generally.
Apportionment industry guide
