All real and personal property is subject to a tax each year based on its highest and best use, unless a specific exemption is provided by law.
 
Some property tax exemptions have been established via the Washington Constitution or statute, including exemptions for churches, nonprofit hospitals, affordable housing, and certain improvements to single-family residences.  If a single-family residence is improved by remodeling, adding new rooms, decks, patios, or other improvements, the owner may apply for a three-year exemption from property taxes on the value of the physical improvement.  To qualify for the exemption, the value of the improvements must be 30 percent or less of the value of the original structure.  The exemption may not be claimed more than once in a five-year period.  New construction of an accessory dwelling unit (ADU) qualifies as a physical improvement for this three-year exemption.
 
Legislation that establishes or expands a tax preference must include a Tax Preference Performance Statement (TPPS) that identifies the public policy objective of the preference, as well as specific metrics that the Joint Legislative Audit and Review Committee (JLARC) can use to evaluate the effectiveness of the preference.  All new tax preferences automatically expire after 10 years unless an alternative expiration date is provided.

A county may choose to exempt certain ADUs from property tax.  In order to qualify, an ADU must be maintained as a rental property for low-income households whose adjusted income is at or below 60 percent of median household income for the county.  Rent charged to a tenant may not exceed more than 30 percent of the tenant's monthly income.  The taxpayer must file notice of intention to participate in the exemption program.  The exemption can continue for as long as the ADU is leased to a low-income household.

If a county has opted to exempt low-income rental ADUs, they may collect a fee from the taxpayer, and may designate agents to verify the income standards for the exemption.

A TPPS identifies the exemption as one intended to encourage homeowners to rent ADUs to low-income households.  The exemption applies to taxes levied for collection in 2023 and thereafter, and expires January 1, 2033.

(In support) Substantially more housing is needed for folks who need affordable housing in our communities.  The cost of land and construction is increasingly expensive, and this bill offers another tool to help provide affordable housing options.  This bill incentivizes homeowners to provide housing for low-income rentals.  One possible change would be to add a rental cap in addition to the income requirement.

(Opposed) Accessory dwelling units are great, but because there is no way to track different types of construction, this bill will be difficult or impossible to implement.  Assessors do not have the capacity to verify income and rental amounts.  Cities and counties have more direct ability to encourage the right kind of incentives for affordable housing.