BILL REQ. #:  S-4423.2 

READ FIRST TIME 01/27/06.   

     AN ACT Relating to tax relief to promote affordable housing; 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 82.08 RCW to read as follows:
     (1)(a) A seller of a low-cost single-family dwelling unit constructed by the seller 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 qualified low-income buyer for use as that buyer's primary residence. The amount of the remittance shall be computed under (b) of this subsection and shall be based on the state share of sales tax under RCW 82.08.020.
     (b) A seller of a low-cost single-family dwelling unit claiming an exemption from the state tax in the form of a remittance under this subsection must pay the tax imposed by RCW 82.08.020. After the low-cost single-family dwelling unit is sold, the seller may then apply to the department for a remittance of fifty percent of the tax paid under RCW 82.08.020 on: (i) Tangible personal property incorporated as an ingredient or component of the low-cost single-family dwelling unit during the course of constructing such dwelling unit; (ii) charges made for labor and services rendered in respect to the constructing of the low-cost single-family dwelling unit; and (iii) charges made for labor and services rendered in respect to installing building fixtures during the course of constructing the low-cost single-family dwelling unit.
     (c) The department shall on a quarterly basis remit exempted amounts to qualifying sellers under this subsection, who submitted applications during the previous quarter.
     (2)(a) A qualified low-income buyer who constructs, contracts for the construction of, or purchases a low-cost single-family dwelling unit and 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 used as the qualified low-income buyer's primary residence.
     (b) A qualified low-income buyer claiming an exemption from the state tax in the form of a remittance under (a) of this subsection must pay the tax imposed by RCW 82.08.020. After the qualified low-income buyer obtains an occupancy permit from the local permit issuing authority or otherwise has the right to occupy the low-cost single-family dwelling unit, the qualified low-income buyer may then apply to the department for a remittance of fifty percent of the tax paid under RCW 82.08.020 on: (i) the purchase of the low-cost single-family dwelling unit; (ii) tangible personal property incorporated as an ingredient or component of the low-cost single-family dwelling unit during the course of constructing such dwelling unit; (iii) charges made for labor and services rendered in respect to the constructing of the low-cost single-family dwelling unit; and (iv) charges made for labor and services rendered in respect to installing building fixtures during the course of constructing the low-cost single-family dwelling unit.
     (c) The department shall on a quarterly basis remit exempted amounts to qualifying buyers under this subsection, who submitted applications during the previous quarter.
     (3) The department shall determine eligibility under this section based on certification by the housing finance commission and through audit and other administrative records. A seller or qualified low-income buyer claiming an exemption under this section shall submit an application to the department for a remittance under this section, in a form and manner prescribed by the department, specifying the amount of exempted tax claimed and the qualifying purchases for which the exemption is claimed. As part of the application, the seller or qualified low-income buyer shall provide to the department invoices or other satisfactory proof of tax paid on the purchases for which an exemption is claimed. The seller or qualified low-income buyer shall also provide certification from the housing finance commission that the low-cost single-family dwelling unit was sold to a qualified low-income buyer or constructed or purchased by the qualified low-income buyer, to be used as that buyer's primary residence.
     (4) A seller of a low-cost single-family dwelling unit under this section shall collect information from the buyer in order to provide the housing finance commission, or the department upon audit of the seller's records, with the information necessary for the commission or department to determine whether the low-cost single-family dwelling unit was sold to a qualified low-income buyer to be used as that buyer's primary residence. The seller claiming the exemption is required to keep any information regarding the buyer's income confidential and can only provide such information to the commission or the department for the purpose of this section.
     (5) A buyer claiming the exemption, who meets the requirements of subsection (2) of this section, must provide the housing finance commission, or the department upon audit of the buyer's records, with the information necessary for the commission or department to determine whether the buyer is a qualified low-income buyer and that the low-cost single-family dwelling unit is to be used as that buyer's primary residence.
     (6) For the purposes of this section, the following definitions apply:
     (a) "Low-cost single-family dwelling unit" means a single-family dwelling unit, whether that unit be separate or part of a multiunit dwelling, used as the qualified low-income buyer's primary residence that had:
     (i) A listed sales price;
     (ii) An appraised value, if the unit was constructed by a qualified low-income buyer; or
     (iii) A sales price for the transfer of ownership in a condominium, or other legal business entity where the ownership in the entity represents the specific unit used as the qualified low-income buyer's primary residence;
equal to or less than the applicable purchase price limits for new construction properties for the county in which the dwelling unit is located as specified in the homeownership program or programs of the housing finance commission at the time of sale by a seller claiming an exemption under subsection (1) of this section or at the time an occupancy permit is obtained by a buyer claiming an exemption under subsection (2) of this section obtains an occupancy permit or otherwise has the legal right to occupy the low-cost single-family dwelling unit. The housing finance commission shall determine whether the single-family dwelling unit meets the sales price or appraised value requirements of this definition. An appraisal for purposes of this act must be conducted by either the county assessor or an appraiser licensed to practice in the state.
     (b) "Multiunit dwelling" means a building that contains two or more dwelling units, including a building containing nonresidential units if the building also contains two or more dwelling units. Multiunit dwelling includes but is not limited to condominiums and buildings containing two or more dwelling units where an ownership interest in a business entity represents the ownership of specific dwelling units within the building. Multiunit dwelling does not include hotels and motels, dormitories, nursing homes or other care facilities, or floating homes.
     The exemption in this section only applies to the portion of the multiunit dwelling in which the qualified low-income buyer resides and does not apply to common areas. The applicable exemption shall be determined by an apportionment method or methods provided by department by rule.
     (c) "Qualified low-income buyer" means a buyer who:
     (i) Has an income of no more than eighty percent of the higher of the: (A) Median family income, adjusted for household size, for the county where the single-family dwelling unit is located; or (B) state median income; and
     (ii) Is an eligible participant in: (A) The homeownership program or programs of the housing finance commission; or (B) a federal, state, or local affordable housing program certified by the commission to be meeting the same goals as the programs of the commission for the purposes of this act.
     (d) "Condominium" has the meaning provided in RCW 64.34.020.

NEW SECTION.  Sec. 2   A new section is added to chapter 82.12 RCW to read as follows:
     (1)(a) A seller of 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 qualified low-income buyer for use as that buyer's primary residence. The amount of the remittance shall be computed under (b) of this subsection and shall be based on the state share of use tax.
     (b) A seller of a low-cost single-family dwelling unit claiming an exemption from the state tax in the form of a remittance under this section must pay the tax imposed by RCW 82.12.020. After the low-cost single-family dwelling unit is sold, the seller may then apply to the department for a remittance of fifty percent of the tax paid under RCW 82.12.020 on tangible personal property incorporated as an ingredient or component of the low-cost single-family dwelling unit during the course of constructing such dwelling unit, and charges made for labor and services rendered in respect to the constructing of the low-cost single-family dwelling unit, and charges made for labor and services rendered in respect to installing building fixtures during the course of constructing the low-cost single-family dwelling unit.
     (c) The department shall on a quarterly basis remit exempted amounts to qualifying sellers under this section, who submitted applications during the previous quarter.
     (2)(a) A qualified low-income buyer who constructs a low-cost single-family dwelling unit and 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 used as the qualified low-income buyer's primary residence.
     (b) A qualified low-income buyer claiming an exemption from the state tax in the form of a remittance under (a) of this subsection must pay the tax imposed by RCW 82.12.020. After the qualified low-income buyer obtains an occupancy permit from the local permit issuing authority, the qualified low-income buyer may then apply to the department for a remittance of fifty percent of the tax paid under RCW 82.12.020 on tangible personal property incorporated as an ingredient or component of the low-cost single-family dwelling unit during the course of constructing such dwelling unit, and charges made for labor and services rendered in respect to installing building fixtures during the course of constructing the low-cost single-family dwelling unit.
     (c) The department shall on a quarterly basis remit exempted amounts to qualifying buyers under this section, who submitted applications during the previous quarter.
     (3) A seller of a low-cost single-family dwelling unit claiming the exemption under this section shall collect information from the buyer in order to provide the housing finance commission, or the department upon audit of the seller's records, with the information necessary for the commission or department to determine whether the low-cost single-family dwelling unit was sold to a qualified low-income buyer to be used as that buyer's primary residence. The seller claiming the exemption is required to keep any information regarding the buyer's income confidential and can only provide such information to the commission or the department for the purpose of this section.
     (4) A qualified low-income buyer claiming the exemption, who meets the requirements of subsection (2) of this section, must provide the housing finance commission, or the department upon audit of the buyer's records, with the information necessary for the commission or department to determine whether the low-cost single-family dwelling unit is to be used as that buyer's primary residence.
     (5) The department shall determine eligibility under this section based on certification by the housing finance commission and through audit and other administrative records.
     (6) The definitions in section 1 of this act apply to this section.

NEW SECTION.  Sec. 3   This act takes effect August 1, 2006.