AN ACT
Relating to the property taxation of senior citizens and persons retired
because of physical disability; amending RCW 84.36.381 and 84.36.383; adding a
new section to chapter 84.40 RCW; creating new sections; repealing 1994 sp.s. c
8 s 3 (uncodified); providing an effective date; and declaring an emergency.
BE IT ENACTED BY THE LEGISLATURE
OF THE STATE OF WASHINGTON:
Sec.
1. 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
(c)
The residence is rented for the purpose of paying nursing home or hospital
costs;
(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; and
(6) ((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)) For a person who otherwise qualifies under this
section and has a combined disposable income of twenty-eight thousand dollars
or less, the 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.
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.
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.
Sec.
2. RCW
84.36.383 and 1994 sp.s. c 8 s 2 are each amended to read as follows:
As
used in RCW 84.36.381 through 84.36.389, except where the context clearly
indicates a different meaning:
(1)
The term "residence" shall mean a single family dwelling unit whether
such unit be separate or part of a multiunit dwelling, including the land on
which such dwelling stands not to exceed one acre. The term shall also include
a share ownership in a cooperative housing association, corporation, or
partnership if the person claiming exemption can establish that his or her
share represents the specific unit or portion of such structure in which he or
she resides. The term shall also include a single family dwelling situated
upon lands the fee of which is vested in the United States or any
instrumentality thereof including an Indian tribe or in the state of
Washington, and notwithstanding the provisions of RCW 84.04.080 and 84.04.090,
such a residence shall be deemed real property.
(2)
The term "real property" shall also include a mobile home which has
substantially lost its identity as a mobile unit by virtue of its being fixed
in location upon land owned or leased by the owner of the mobile home and placed
on a foundation (posts or blocks) with fixed pipe, connections with sewer,
water, or other utilities: PROVIDED, That a mobile home located on land leased
by the owner of the mobile home shall be subject, for tax billing, payment, and
collection purposes, only to the personal property provisions of chapter 84.56
RCW and RCW 84.60.040.
(3)
"Department" shall mean the state department of revenue.
(4)
"Combined disposable income" means the disposable income of the
person claiming the exemption, plus the disposable income of his or her spouse,
and the disposable income of each cotenant occupying the residence for the
assessment year, less amounts paid by the person claiming the exemption or his
or her spouse during the assessment year for:
(a)
Drugs supplied by prescription of a medical practitioner authorized by the laws
of this state or another jurisdiction to issue prescriptions; and
(b)
The treatment or care of either person received in the home or in a nursing
home.
(5)
"Disposable income" means adjusted gross income as defined in the
federal internal revenue code, as amended prior to January 1, 1989, or such
subsequent date as the director may provide by rule consistent with the purpose
of this section, plus all of the following items to the extent they are not
included in or have been deducted from adjusted gross income:
(a)
Capital gains, other than nonrecognized gain on the sale of a principal
residence under section 1034 of the federal internal revenue code, or gain
excluded from income under section 121 of the federal internal revenue code to
the extent it is reinvested in a new principal residence;
(b)
Amounts deducted for loss;
(c)
Amounts deducted for depreciation;
(d)
Pension and annuity receipts;
(e)
Military pay and benefits other than attendant-care and medical-aid payments;
(f)
Veterans benefits other than attendant-care and medical-aid payments;
(g)
Federal social security act and railroad retirement benefits;
(h)
Dividend receipts; and
(i)
Interest received on state and municipal bonds.
(6)
"Cotenant" means a person who resides with the person claiming the
exemption and who has an ownership interest in the residence.
NEW
SECTION. Sec. 3. A new
section is added to chapter 84.40 RCW to read as follows:
The
assessor shall maintain an assessed valuation in accordance with the approved
revaluation cycle for a residence owned by a person qualifying for exemption
under RCW 84.36.381 in addition to the valuation required under RCW
84.36.381(6). Upon a change in the true and fair value of the residence, the
assessor shall notify the person qualifying for exemption under RCW 84.36.381
of the new true and fair value and that the new true and fair value will be
used to compute property taxes if the property fails to qualify for exemption
under RCW 84.36.381.
NEW
SECTION. Sec. 4. The
department of revenue shall review the effect of the valuation freeze in RCW
84.36.381(6) on taxpayers who are not eligible for the freeze. The department
shall develop alternative methods that could be used to prevent tax shifts as a
result of the freeze, and report on those alternatives to the fiscal committees
of the senate and house of representatives on or before December 31, 1995.
NEW
SECTION. Sec. 5. 1994
sp.s. c 8 s 3 (uncodified) is repealed.
NEW
SECTION. Sec. 6. Chapter
8, Laws of 1994 sp. sess. shall take effect July 1, 1995, and shall be
effective for taxes levied in 1995 for collection in 1996 and thereafter.
NEW
SECTION. Sec. 7. This act
shall apply to taxes levied in 1995 for collection in 1996 and thereafter.
NEW
SECTION. Sec. 8. If any
provision of this act or its application to any person or circumstance is held
invalid, the remainder of the act or the application of the provision to other
persons or circumstances is not affected.
NEW
SECTION. Sec. 9. 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.
