2092

AN ACT Relating to valuation for property tax purposes; amending RCW 84.36.381; adding new sections to chapter 84.40 RCW; creating a new section; repealing 1994 sp.s. c 8 s 3 (uncodified); providing effective dates; and declaring an emergency.

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 freezing property valuations for low-income senior citizens and disabled persons, and limiting valuation increases for other persons to the lesser of inflation or ten percent per year.

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 lesser 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.

Sec. 5. RCW 84.36.381 and 1994 sp.s. c 8 s 1 are each amended to read as follows:

A person shall be exempt from any legal obligation to pay all or a portion of the amount of excess and regular real property taxes due and payable in the year following the year in which a claim is filed, and thereafter, in accordance with the following:

(1) The property taxes must have been imposed upon a residence which was occupied by the person claiming the exemption as a principal place of residence as of the time of filing: PROVIDED, That any person who sells, transfers, or is displaced from his or her residence may transfer his or her exemption status to a replacement residence, but no claimant shall receive an exemption on more than one residence in any year: PROVIDED FURTHER, That confinement of the person to a hospital or nursing home shall not disqualify the claim of exemption if:

(a) The residence is temporarily unoccupied;

(b) The residence is occupied by a spouse and/or a person financially dependent on the claimant for support; or

(2) The person claiming the exemption must have owned, at the time of filing, in fee, as a life estate, or by contract purchase, the residence on which the property taxes have been imposed or if the person claiming the exemption lives in a cooperative housing association, corporation, or partnership, such person must own a share therein representing the unit or portion of the structure in which he or she resides. For purposes of this subsection, a residence owned by a marital community or owned by cotenants shall be deemed to be owned by each spouse or cotenant, and any lease for life shall be deemed a life estate;

(3) The person claiming the exemption must be sixty-one years of age or older on December 31st of the year in which the exemption claim is filed, or must have been, at the time of filing, retired from regular gainful employment by reason of physical disability: PROVIDED, That any surviving spouse of a person who was receiving an exemption at the time of the person's death shall qualify if the surviving spouse is fifty-seven years of age or older and otherwise meets the requirements of this section;

(4) The amount that the person shall be exempt from an obligation to pay shall be calculated on the basis of combined disposable income, as defined in RCW 84.36.383. If the person claiming the exemption was retired for two months or more of the assessment year, the combined disposable income of such person shall be calculated by multiplying the average monthly combined disposable income of such person during the months such person was retired by twelve. If the income of the person claiming exemption is reduced for two or more months of the assessment year by reason of the death of the person's spouse, or when other substantial changes occur in disposable income that are likely to continue for an indefinite period of time, the combined disposable income of such person shall be calculated by multiplying the average monthly combined disposable income of such person after such occurrences by twelve. If it is necessary to estimate income to comply with this subsection, the assessor may require confirming documentation of such income prior to May 31 of the year following application;

(5)(a) A person who otherwise qualifies under this section and has a combined disposable income of twenty-eight thousand dollars or less shall be exempt from all excess property taxes; and

(b)(i) A person who otherwise qualifies under this section and has a combined disposable income of eighteen thousand dollars or less but greater than fifteen thousand dollars shall be exempt from all regular property taxes on the greater of thirty thousand dollars or thirty percent of the valuation of his or her residence, but not to exceed fifty thousand dollars of the valuation of his or her residence; or

(ii) A person who otherwise qualifies under this section and has a combined disposable income of fifteen thousand dollars or less shall be exempt from all regular property taxes on the greater of thirty-four thousand dollars or fifty percent of the valuation of his or her residence;

(6)(a) For a person who otherwise qualifies under this section and has a combined disposable income of twenty-eight thousand dollars or less, the ((taxable value of the residence shall not exceed the lesser of (a) the assessed value of the residence as reduced by the exemption under subsection (5) of this section, if any, or (b) the taxable value of the residence for the previous year, increased by the inflation factor for the assessment year. For counties that do not revalue property annually, the amount under (b) of this subsection shall be the previous taxable value increased by the inflation factor for each assessment year since the previous revaluation of the residence. As used in this section, "inflation factor" means the percentage change used by the federal government in adjusting social security payments for inflation at the beginning of each year. The department shall provide inflation factors to the county assessors annually)) valuation of the residence shall be the true and fair value of the residence on the later of January 1, 1995, or January 1st of the year the person first qualifies under this section. If the person subsequently fails to qualify under this section only for one year because of high income, this same valuation shall be used upon requalification. If the person fails to qualify for more than one year in succession because of high income or fails to qualify for any other reason, the valuation upon requalification shall be the true and fair value on January 1st of the year in which the person requalifies. If the person transfers the exemption under this section to a different residence, the valuation of the different residence shall be the true and fair value of the different residence on January 1st of the year in which the person transfers the exemption.

(b) In no event may the valuation under this subsection be greater than the true and fair value of the residence on January 1st of the assessment year.

(c) This subsection does not apply to subsequent improvements to the property in the year in which the improvements are made. Subsequent improvements to the property shall be added to the value otherwise determined under this subsection at their true and fair value in the year in which they are made.

NEW SECTION. Sec. 6. 1994 sp.s. c 8 s 3 (uncodified) is repealed.

NEW SECTION. Sec. 7. Chapter 8, Laws of 1994 sp. sess. shall take effect July 1, 1995, and shall be effective for taxes levied for collection in 1996 and thereafter.

NEW SECTION. Sec. 8. This act is necessary for the immediate preservation of the public peace, health, or safety, or support of the state government and its existing public institutions, and shall take effect July 1, 1995, and is effective for taxes levied for collection in 1996 and thereafter.