BILL REQ. #:  S-0544.2 

Read first time 01/17/2005.   Referred to Committee on Financial Institutions, Housing & Consumer Protection.

     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 adding a new section to chapter 82.45 RCW.

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 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 of community, trade, and economic development 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. The department shall provide a list that names nonprofit organizations meeting the requirements of subsection (1) of this section.
     (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) The tax levied by RCW 82.08.020 does not apply to sales of construction materials or charges made for labor and services used in the construction of low-cost single-family dwelling units, but only if the buyer provides the seller with an exemption certificate in a form and manner prescribed by the department by rule. The seller shall retain a copy of the certificate for the seller's files.
     (2) If the dwelling unit is sold for a price above the amount specified in subsection (4)(a) of this section, retail sales taxes for construction materials or charges made for labor and services used in the construction of low-cost single-family dwelling units are no longer exempt under subsection (1) of this section and are immediately due and payable together with interest and penalties by the seller of the dwelling unit.
     (3) The department shall make rules to implement this section.
     (4) For the purposes of this section, the following definitions apply:
     (a) "Low-cost single-family dwelling unit" means a dwelling unit that has a listed sales price of no more than two-thirds the median sales price 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 make this determination.
     (b) "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. 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.

NEW SECTION.  Sec. 3   A new section is added to chapter 82.12 RCW to read as follows:
     (1) The provisions of this chapter do not apply to the use of construction materials or labor and services used in the construction of low-cost single-family dwelling units, but only if the buyer provides the seller with an exemption certificate in a form and manner prescribed by the department by rule. The seller shall retain a copy of the certificate for the seller's files.
     (2) If the dwelling unit is sold for a price above the amount specified in section 2(4)(a) of this act, retail sales taxes for construction materials or charges made for labor and services used in the construction of low-cost single-family dwelling units are no longer exempt under subsection (1) of this section and are immediately due and payable together with interest and penalties by the seller of the dwelling unit.
     (3) The department shall make rules to implement this section.
     (4) The definitions in section 2 of this act apply to this section.

NEW SECTION.  Sec. 4   A new section is added to chapter 82.45 RCW to read as follows:
     (1) Sales of real property meeting the following requirements are exempt from tax under this chapter:
     (a) The real property must include a single-family dwelling unit.
     (b) The selling price of the real property must be no more than two-thirds of the median sales price for single-family dwelling units in the county where the real property is located, adjusted annually. The department of community, trade, and economic development shall provide the department with information necessary to make this determination.
     (c) The real property must be sold to a low-income buyer.
     (2) To receive the exemption under this section, the buyer must file an application with the department in a form and manner required by the department. The application must include any documentation deemed necessary by the department to determine whether the applicant qualifies as a low-income buyer. If the application is approved, the buyer shall present a certificate issued by the department to the seller that states the buyer is exempt from tax under this chapter. The certificate shall be affixed to the instrument of sale under RCW 82.45.090(1).
     (3) For the purposes of this section, the following definitions apply:
     (a) "Low-income buyer" means a buyer with 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. The department of community, trade, and economic development shall provide the department with information necessary to make this determination.
     (b) "Single-family dwelling unit" has the same meaning as provided in section 2 of this act.

NEW SECTION.  Sec. 5   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.