BP BHEAD INT H

AN ACT Relating to valuation for property tax purposes; adding new sections to chapter 84.40 RCW; creating a new section; and providing a contingent effective date.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

NEW SECTION. Sec. 1. The intent of this act is to provide property tax relief by limiting increases in valuation of real property tax for tax purposes to ten percent per year until the ownership of the property changes.

NEW SECTION. Sec. 2. As used in section 3 of this act:

(1) "Change of ownership" means a transfer of a present interest in real property, including a transfer of the beneficial use of real property.

(a) "Change of ownership" includes, except as provided in (b) and (c) of this subsection, the following:

(i) Contracting to convey the title to or ownership of real property upon the fulfillment of one or more stated conditions where the right to possession of the property is transferred currently.

(ii) The creation, transfer, or termination of a joint tenancy interest.

(iii) The creation, transfer, or termination of a tenancy-in-common interest.

(iv) The vesting of a right of possession or enjoyment of a remainder or reversionary interest that occurs upon the termination of a life estate or other similar precedent property interest.

(v) An interest that vests in persons other than the trustor where a revocable trust becomes irrevocable.

(vi) The transfer of stock of a cooperative housing corporation, vested with legal title to real property, that conveys to the transferee the exclusive right to occupancy and possession of such property, or a portion of the property.

(b) "Change of ownership" does not include:

(i) A transfer between co-owners that results in a change in the method of holding title to the real property transferred without changing the proportional interests of the co-owners in the real property, such as a partition of a tenancy-in-common.

(ii) A transfer for the purpose of merely perfecting title to the real property.

(iii) The creation, assignment, termination, or reconveyance of a security interest in real property; or the substitution of a trustee under a security instrument.

(iv) A transfer of real property by the trustor, or by the trustor's spouse, or by both, into a trust for so long as the transferor is the sole present beneficiary of the trust, or the trust is revocable; or any transfer of real property by a trustee of such trust back to the trustor.

(v) A transfer of real property by an instrument whose terms reserve to the transferor an estate for years or an estate for life. However, the termination of such an estate for years or life estate shall constitute a change of ownership.

(vi) A transfer of real property between or among the same parties for the purpose of correcting or reforming a deed to express the true intention of the parties, if the original relationship between the grantor and grantee is not changed.

(c) "Change of ownership" also does not include an interspousal transfer of real property, including, but not limited to:

(i) Transfers to a trustee for the beneficial use of a spouse, or the surviving spouse of a deceased transferor, or by a trustee of such trust to the spouse of the trustor;

(ii) Transfers that take effect upon the death of a spouse;

(iii) Transfers to a spouse or former spouse in connection with a property settlement agreement or decree of dissolution of marriage or legal separation; and

(iv) The creation, transfer, or termination, solely between spouses, of any co-owner's interest.

(2) "Inflation factor" means a number which is provided by the department and is appropriate for use in measuring changes in the cost of living. The department may base the factor upon recognized measures of inflation, including but not limited to the consumer price index as published by the bureau of labor statistics of the federal department of labor.

(3) "Owned" means owned in fee, as a life estate, or by contract purchase.

NEW SECTION. Sec. 3. (1) Real property shall be valued under this section, unless there has been a change of ownership since the previous valuation of the property. If there has been a change of ownership since the previous valuation of the property, the property shall be revalued as otherwise provided by law.

(2) The assessed value of property that is valued under this section shall be equal to the lesser of the following:

(a) True and fair market value as established by the county assessor in accordance with applicable law; or

(b) The most recent assessed value of the property increased on January 1 each year thereafter by the greater of the inflation factor or ten percent, compounded annually, plus the portion of the true and fair market value attributable to any construction or alteration not included in the previous assessment, other than construction or alteration that is otherwise exempt by law.

NEW SECTION. Sec. 4. Sections 2 and 3 of this act are each added to chapter 84.40 RCW.

NEW SECTION. Sec. 5. This act shall take effect January 1, 1996, if an amendment to the state Constitution authorizing property tax valuation in the manner provided in section 3 of this act is validly submitted to and is approved and ratified by the voters at a general election held in November 1995. If an amendment is not so approved and ratified, this act is void in its entirety.