BILL REQ. #:  S-0725.2 

READ FIRST TIME 02/02/05.   

     AN ACT Relating to tax relief to promote affordable housing; adding a new section to chapter 82.04 RCW; adding a new section to chapter 82.08 RCW; adding a new section to chapter 82.12 RCW; and providing an effective date.

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

NEW SECTION.  Sec. 1   A new section is added to chapter 82.04 RCW to read as follows:
     (1) In computing the tax imposed under this chapter, a credit is allowed for each person for twenty-five percent of the value of donations made by the person to a nonprofit organization located in Washington that is exempt from federal income tax under section 501(c)(3) of the internal revenue code that uses a majority of its resources for the development, rehabilitation, or preservation of affordable housing.
     (2) The department shall provide a list that names nonprofit organizations meeting the requirements of subsection (1) of this section. The person claiming the credit shall provide the department with information necessary to make the determination as to whether a nonprofit organization meets the requirements under subsection (1) of this section if the nonprofit organization is not on the list created by the department.
     (3) In the case of donated tangible items, the value of the donation shall be determined in the same manner that the term "value of the article used" is determined under RCW 82.12.010. In the case of labor and services, the value of the donation shall be determined by the allocation of the cost method using generally accepted accounting standards.
     (4) The credit under this section may be used against any tax due under this chapter. Credits earned during one reporting period may be carried over to subsequent reporting periods, however, no refunds may be granted for credits under this section.
     (5) No application is necessary for the tax credit, however, the person must keep records necessary for the department to verify eligibility under this section. These records include information relating to a description of the property donated by the person.
     (6) For the purposes of this section, "affordable housing" has the same meaning as provided in RCW 43.185A.010.

NEW SECTION.  Sec. 2   A new section is added to chapter 82.08 RCW to read as follows:
     (1) A person selling real property that includes a low-cost single-family dwelling unit who has paid the tax levied by RCW 82.08.020 is eligible for an exemption in the form of a remittance, provided that the low-cost single-family dwelling unit is sold to a low-income buyer for use as that buyer's primary residence. The amount of the remittance shall be computed under subsection (2) of this section and shall be based on the state share of sales tax under RCW 82.08.020.
     (2)(a) A person claiming an exemption from the state tax in the form of a remittance under this section must have paid the tax imposed by RCW 82.08.020 either directly during the construction process or to a contractor performing the construction. After the low-cost single-family dwelling unit is sold, the person selling the real property may then apply to the department for a remittance of fifty percent of the tax paid under RCW 82.08.020 on construction materials or charges made for labor and services used in the construction of a low-cost single-family dwelling unit.
     (b) The department shall determine eligibility under this section based on information provided by the person selling the real property, as the department may require, and through audit and other administrative records.
     (3) The department shall make rules to implement this section, including requiring the person claiming the exemption to collect information from the buyer in order to provide the department with the information necessary for the department to determine whether the low-cost single-family dwelling unit was sold to a low-income buyer to be used as that buyer's primary residence. The person claiming the exemption is required to keep any information regarding the buyer's income confidential and can only provide such information to the department for the purpose of this section.
     (4) For the purposes of this section, the following definitions apply:
     (a) "Low-cost single-family dwelling unit" means a dwelling unit used as the low-income buyer's primary residence that has a listed sales price, or an appraised value if the unit was constructed by the primary resident, of no more than two-thirds the median sales price for the previous calendar year for single-family dwelling units in the county where the housing is located, adjusted annually. The department of community, trade, and economic development shall provide the department with information necessary to determine whether the dwelling unit meets the sales price or appraised value requirements of this definition.
     (b) "Person" has the same meaning as provided in RCW 82.04.030.
     (c) "Single-family dwelling unit" means a single or multiunit dwelling, including the land upon which the dwelling stands, but not to exceed one-half acre per dwelling unit. The term also includes 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 also includes 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.
     (d) "Low-income buyer" means a buyer who has an income of no more than eighty percent of the median family income, adjusted for household size, for the county where the dwelling unit is located.

NEW SECTION.  Sec. 3   A new section is added to chapter 82.12 RCW to read as follows:
     (1) A person selling real property that includes a low-cost single-family dwelling unit who has paid the tax levied by RCW 82.12.020 is eligible for an exemption in the form of a remittance, provided that the low-cost single-family dwelling unit is sold to a low-income buyer for use as that buyer's primary residence. The amount of the remittance shall be computed under subsection (2) of this section and shall be based on the state share of use tax.
     (2)(a) A person claiming an exemption from the state tax in the form of a remittance under this section must have paid the tax imposed by RCW 82.12.020 either directly during the construction process or to a contractor performing the construction. After the low-cost single-family dwelling unit is sold, the person selling the real property may then apply to the department for a remittance of fifty percent of the tax paid under RCW 82.12.020 on construction materials or charges made for labor and services used in the construction of a low-cost single-family dwelling unit.
     (b) The department shall determine eligibility under this section based on information provided by the person selling the real property, as the department may require, and through audit and other administrative records.
     (3) The department shall make rules to implement this section, including requiring the person claiming the exemption to collect information from the buyer in order to provide the department with the information necessary for the department to determine whether the low-cost single-family dwelling unit was sold to a low-income buyer to be used as that buyer's primary residence. The person claiming the exemption is required to keep any information regarding the buyer's income confidential and can only provide such information to the department for the purpose of this section.
     (4) The definitions in section 2 of this act apply to this section.

NEW SECTION.  Sec. 4   This act takes effect August 1, 2005.