BP BHEAD INT H

AN ACT Relating to homeowner's property tax deferral; adding a new chapter to Title 84 RCW; and creating a new section.

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

NEW SECTION. Sec. 1. Historically, taxation of property has been a tax upon wealth, but increasingly, ownership of a home is not necessarily an indication of ability to pay property taxes. In some instances, as property values rise and equity in a home increases, the ability of taxpayers to gain access to the funds needed to pay their property taxes means borrowing against or even selling their homes. Over the years, increases in property taxes have exceeded increases in household incomes. Homeowners who are faced with the loss of a job, death of a spouse, or other hardship should not be required to give up their home primarily because of property tax increases. It is therefore the intent of the legislature to ease the property tax burden and aid homeowners who qualify for this program to maintain their dignity and a reasonable standard of living by residing in their own homes, providing for their own needs, and managing their own affairs without requiring welfare assistance from the state.

NEW SECTION. Sec. 2. Unless the context clearly requires otherwise, the definitions in this section apply throughout this chapter.

(1) "Claimant" means a person who elects to defer payment of the real property taxes accrued on the claimant's residence by filing a declaration to defer as provided by this chapter.

If two or more individuals of a household file or seek to file a declaration to defer, they may determine between or among them as to who is the claimant.

(2) "Cotenant" means a person who resides with the person claiming the deferral and who has an ownership interest in the residence.

(3) "Department" means the department of revenue of the state of Washington.

(4) "Equity value" means the amount by which the fair market value of a residence as determined from the records of the county assessor exceeds the total amount of any liens or other obligations against the property.

(5) "Real property taxes" means ad valorem property taxes levied on a residence in this state in the preceding calendar year.

(6) "Residence" has the meaning given in RCW 84.36.383, except that a residence includes any additional property up to a total of five acres that comprises the residential parcel if this larger parcel size is required under land use regulations.

NEW SECTION. Sec. 3. A claimant may defer payment of real property taxes on the claimant's primary residence to the extent that the total of the taxes in the year the declaration is filed exceeds five percent of the amount determined in subsection (2) of this section, on up to eighty percent of the amount of the claimant's equity value in the claimant's residence, if the following conditions are met:

(1) The claimant must meet all requirements for an exemption for the residence under RCW 84.36.381(1);

(2) The claimant must have adjusted gross income, together with the adjusted gross income of the claimant's spouse, and the adjusted gross income of each cotenant occupying the residence, of fifty thousand dollars or less, in the calendar year preceding the filing of the declaration. Adjusted gross income has the meaning defined in the federal internal revenue code, as amended before January 1, 1996, or such subsequent date as the director may provide by rule consistent with the purpose of this section;

(3) The claimant must have owned, at the time of filing, the residence on which the real property taxes have been imposed. For purposes of this subsection, a residence owned by a marital community or owned by cotenants must be deemed to be owned by each spouse or cotenant. A claimant who has only a share ownership in cooperative housing, a life estate, a lease for life, or a revocable trust does not satisfy the ownership requirement; and

(4) The claimant must have and keep in force fire and casualty insurance in sufficient amount to protect the interest of the state in the claimant's equity value. If the claimant fails to keep fire and casualty insurance in force to the extent of the state's interest in the claimant's equity value, the amount deferred shall not exceed one hundred percent of the claimant's equity value in the land or lot only.

NEW SECTION. Sec. 4. (1) A claimant electing to defer payment of real property taxes under this chapter shall annually file with the county assessor, on forms prescribed by the department and supplied by the assessor, a written declaration of the election. The claimant shall file the declaration to defer payment of real property taxes in duplicate by July 31st of the year the taxes are due. For good cause shown the department may waive this filing deadline.

(2) The declaration must designate the property to which the deferral applies and must include a statement setting forth: A list of all members of the claimant's household; the claimant's equity value in the claimant's residence; facts establishing the eligibility for the deferral under this chapter; and other relevant information required by rule of the department. The claimant shall sign each copy, subject to the penalties as provided in chapter 9A.72 RCW for false swearing.

(3) The county assessor shall determine if the claimant is to be granted a deferral but the claimant may appeal this determination to the county board of equalization, whose decision is final as to the deferral of that year.

(4) The county treasurer shall issue a tax statement or revised tax statement for each claimant granted deferral under this chapter. The tax statement must state the amount of tax to be paid by the claimant and the amount of tax to be paid by the state.

NEW SECTION. Sec. 5. A person's right to defer real property taxes on the person's residence may not be limited by contract or agreement, from the effective date of this act and thereafter.

NEW SECTION. Sec. 6. If a residence is under mortgage, deed of trust, or purchase contract requiring accumulation of reserves out of which the holder of the mortgage, deed of trust, or contract is required to pay real property taxes, the holder shall cosign the declaration of deferral either before a notary public or the county assessor or the county assessor's deputy in the county where the real property is located.

NEW SECTION. Sec. 7. (1) If a person's real property taxes are deferred under this chapter, the amount deferred and required to be paid under section 9 of this act becomes a lien in favor of the state upon the person's property and has priority as provided in chapter 84.60 RCW. The interest of a mortgage, deed of trust, or purchase contract holder who is required to cosign a declaration of deferral under section 6 of this act, has priority to the deferred lien. The lien may accumulate up to eighty percent of the amount of the claimant's equity value in the property and must bear interest at the rate of eight percent per year from the time it could have been paid before delinquency until the taxes are paid. For a mobile home, the department of licensing shall show the state's lien on the certificate of ownership for the mobile home. For all other property, the department of revenue shall file a notice of the deferral with the county recorder or auditor.

(2) Real property taxes not deferred under this chapter or as otherwise provided by law are due and payable as provided in chapter 84.56 RCW.

NEW SECTION. Sec. 8. The county assessor shall:

(1) Immediately transmit one copy of each declaration to defer to the department. The department may audit a declaration and shall notify the assessor as soon as possible of a claim if a factor appears to disqualify the claimant for the deferral sought;

(2) Compute the dollar tax rate for the county as if deferrals provided by this chapter did not exist; and

(3) As soon as possible notify the department and the county treasurer of the amount of real property taxes deferred under this chapter for that year.

NEW SECTION. Sec. 9. (1) After receipt of the notification from the county assessor of the amount of deferred real property taxes under this chapter, the department shall certify to the state treasurer the amount due the respective municipal corporations and the state treasurer shall pay, from amounts appropriated for that purpose, to the treasurers of the municipal corporations the amounts, equivalent to the amount of real property taxes deferred, to be distributed to the taxing districts which levied the taxes so deferred.

(2) The state is not liable for payment of any interest or penalty related to real property taxes that are delinquent, regardless of whether the delinquency is attributable to the state. The claimant shall pay any interest or penalty attributable to the claimant.

(3) If the claimant has, at the time of filing the declaration to defer, already paid a portion of the claimant's real property taxes for the current year, any portion paid that exceeds the amount of real property tax that would have been allowed to be deferred under this chapter must be deducted from the amount to be paid by the state.

NEW SECTION. Sec. 10. Real property taxes deferred under this chapter become payable, together with interest as provided in section 7 of this act:

(1) Upon the sale of property that has a deferred real property tax lien upon it;

(2) Upon the death of the claimant owning property with an outstanding real property tax lien, except that a surviving spouse or cotenant who is qualified under this chapter may elect to incur the real property tax lien which shall then be payable by that spouse or cotenant as provided in this section;

(3) Upon the condemnation of property with a deferred real property tax lien upon it by a public or private body exercising eminent domain power, except as otherwise provided in RCW 84.60.070;

(4) At the time the claimant ceases to reside permanently in the residence for which the deferral has been granted; or

(5) Upon foreclosure proceedings initiated in accordance with chapter 84.64 RCW.

NEW SECTION. Sec. 11. (1) Upon the occurrence of an event listed in section 10 of this act, the county treasurer shall collect all the amounts deferred under this chapter, together with interest, in the manner provided in chapter 84.56 RCW. For purposes of collection of deferred taxes, chapters 84.56, 84.60, and 84.64 RCW apply.

(2) If deferred real property taxes together with interest are collected the moneys must be credited to a special account in the county treasury. The county treasurer shall remit the amount of deferred real property taxes together with interest to the state treasurer within thirty days from the date of collection.

(3) The state treasurer shall deposit the deferred taxes in the state general fund.

NEW SECTION. Sec. 12. (1) A surviving spouse of the claimant or cotenant may elect to continue the property in its deferred tax status if the property is the residence of the cotenant or the spouse of the claimant and the cotenant or spouse meets the requirements of this chapter.

(2) The election under this section to continue the property in its deferred status by the cotenant or spouse of the claimant must be filed in the same manner as an original declaration for deferral is filed under this chapter within ninety days from the date of the claimant's death. Thereupon, the property with respect to which the deferral of real property taxes is claimed must continue to be treated as deferred property. If the property has been continued in its deferred status by the filing of the cotenant or spouse of the claimant of an election under this section, the cotenant or spouse of the claimant may continue the property in its deferred status in subsequent years by filing a declaration under this chapter and meeting the requirements of this chapter. For good cause shown, the department may waive the ninety-day filing deadline.

NEW SECTION. Sec. 13. A person may at any time pay a part or all of the deferred taxes. If a partial payment is made, there is no affect on the deferred tax status of the property.

NEW SECTION. Sec. 14. This chapter is not intended to nor may it be construed to prevent the collection, by foreclosure, of personal property taxes or special assessments that become a lien against tax-deferred property.

NEW SECTION. Sec. 15. The department shall devise the forms and adopt rules consistent with chapter 34.05 RCW and this chapter as are necessary or desirable to permit the effective administration of this chapter.

NEW SECTION. Sec. 16. Sections 1 through 15 of this act shall constitute a new chapter in Title 84 RCW.

NEW SECTION. Sec. 17. This act applies to taxes levied in 1996 for collection in 1997 and thereafter.