BILL REQ. #:  S-4430.1 

Read first time 01/20/2006.   Referred to Committee on Ways & Means.

     AN ACT Relating to deferral of large property tax increases; amending RCW 84.38.010 and 84.38.050; adding new sections to chapter 84.38 RCW; and creating a new section.

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

NEW SECTION.  Sec. 1   A new section is added to chapter 84.38 RCW to read as follows:
     The legislature finds that it has become increasingly difficult for many homeowners to pay the increased taxes resulting from rapid increases in valuation. The legislature intends to allow low and middle-income homeowners to defer payment of property taxes on their principal residences to the extent that tax increases exceed fifteen percent. The deferral program created in section 2 of this act is intended to assist persons in maintaining their homes by easing the increases in tax.

NEW SECTION.  Sec. 2   A new section is added to chapter 84.38 RCW to read as follows:
     (1) A claimant may defer that portion of the increase in real property taxes on the claimant's principal residence that exceeds fifteen percent of the taxes due the previous year. In determining the amount of taxes that are eligible for deferral under this chapter, any increase in tax due to physical improvements made to the property since the previous assessment shall not be considered in the year in which improvements are made.
     (2) Deferral of taxes under this chapter is subject to the following conditions:
     (a) 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 shall 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.
     (b) The property taxes must have been imposed upon a residence that was occupied by the claimant as a principal place of residence.
     (c) The claimant must have a combined disposable income, as defined in RCW 84.36.383, less than one hundred twenty-five percent of the state median household income as estimated for the previous year by the office of financial management.
     (d) A deferral is not allowed for taxes levied in the first full calendar year in which the person owns the residence.
     (e) 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.
     (f) The total amount of taxes deferred, including interest thereon, must not exceed eighty percent of the claimant's equity value in the residence.

Sec. 3   RCW 84.38.010 and 1975 1st ex.s. c 291 s 26 are each amended to read as follows:
     The legislature finds that savings once deemed adequate for retirement living have been rendered inadequate by increased tax rates, increased property values, and the failure of pension systems to adequately reflect such factors. It is therefore deemed necessary that the legislature, in addition to that tax exemption as provided for in RCW 84.36.381 through 84.36.389 as now or hereafter amended, allow retired persons to defer payment of special assessments on their residences, and to defer their real property tax obligations on their residences, an amount of up to eighty percent of their equity in said property. ((This deferral program)) The deferral provided under RCW 84.38.030 is intended to assist retired persons in maintaining 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 assistance from public welfare programs.

Sec. 4   RCW 84.38.050 and 1979 ex.s. c 214 s 8 are each amended to read as follows:
     (1)(a) Declarations to defer property taxes for all years following the first year under RCW 84.38.030 may be made by filing with the county assessor no later than thirty days before the tax is due a renewal form in duplicate, prescribed by the department of revenue and supplied by the county assessor, which affirms the continued eligibility of the claimant.
     (b) In January of each year, the county assessor shall send to each claimant who has been granted deferral of ad valorem taxes for the previous year under RCW 84.38.030 renewal forms and notice to renew.
     (2) Declarations to defer special assessments shall be made by filing with the assessor no later than thirty days before the special assessment is due on a form to be prescribed by the department of revenue and supplied by the county assessor. Upon approval, the full amount of special assessments upon such claimant's residence shall be deferred but not to exceed an amount equal to eighty percent of the claimant's equity value in said property.

NEW SECTION.  Sec. 5   This act is effective for taxes levied for collection in 2007 and thereafter.