BILL REQ. #:  S-0926.2 

Read first time 01/30/09.   Referred to Committee on Financial Institutions, Housing & Insurance.

     AN ACT Relating to real estate excise tax exemptions to stabilize neighborhoods; adding new sections to chapter 82.45 RCW; creating a new section; and providing expiration dates.

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

NEW SECTION.  Sec. 1   The legislature finds that there is a substantial inventory of unsold or foreclosed vacant homes on the market that is driving property values down and destabilizing neighborhoods. These homes also present an opportunity to provide affordable homes to low-income families, addressing some of the unmet need for affordable housing in the state of Washington. The legislature also finds that providing targeted incentives to housing developers will stimulate the sale of these vacant homes to low-income buyers now and stabilize neighborhoods affected by this growing inventory. The legislature intends to provide such incentives through excise tax relief on sales of homes to low-income first-time homebuyers.

NEW SECTION.  Sec. 2   A new section is added to chapter 82.45 RCW to read as follows:
     (1) A sale of a qualifying residential housing unit by a qualifying seller to a qualifying buyer is exempt from tax under this chapter.
     (2) In addition to the other requirements of this section, the buyer must: (a) Submit a copy of his or her federal tax return for the prior calendar year and any other documentation the department may require; and (b) acquire the property through a thirty-year fixed-rate mortgage.
     (3) The department must provide on its web site the income limits to qualify as a qualifying buyer, classified by county and family size.
     (4) When the amount of state real estate excise taxes exempted under this section exceeds one million dollars in any fiscal year, the department must contact all county treasurers to notify them that the exemption authorized under this section must be disallowed beginning on the first day of the second month following the transmittal month to the state treasurer under RCW 82.45.180 where the one million dollar limit was determined by the department to be exceeded. The disallowance of the exemption under this subsection applies for the remainder of the state fiscal year unless the effective date of the disallowance occurs in the following fiscal year, in which case this subsection does not apply.
     (5) The definitions in this subsection apply to this section.
     (a) "Combined disposable income" means the disposable income of the person claiming the exemption, plus the disposable income of his or her spouse or domestic partner, and the disposable income of each cotenant occupying the residence for the assessment year.
     (b) "Disposable income" means adjusted gross income as defined in the federal internal revenue code, as amended prior to January 1, 2009, or such subsequent date as the director may provide by rule consistent with the purpose of this section.
     (c) "Qualifying buyer" means an individual or his or her spouse or domestic partner who has not owned a home during the three-year period prior to purchase of a home, with a combined disposable income for the prior calendar year at or below eighty percent of the median family income for the prior year in the county where the project is located, as adjusted for family size and reported by the United States department of housing and urban development, and the individual and his or her spouse or domestic partner has completed a financial education class consistent with standards adopted by the Washington state housing finance commission.
     (d) "Qualifying residential housing unit" means a new residential housing unit or a residential housing unit that has been foreclosed and is unoccupied due to the foreclosure.
     (e) "Qualifying seller" means a person registered under RCW 82.32.030 who is primarily engaged in the business of building of rehabilitating residential housing units.
     (f) "Residential housing unit" or "unit" means a single-family home, condominium, or townhome, and includes the land upon which the home, condominium, or townhome is located.
     (6) An exemption may not be claimed under this section for sales occurring on or after January 1, 2013.
     (7) This section expires July 1, 2013.

NEW SECTION.  Sec. 3   A new section is added to chapter 82.45 RCW to read as follows:
     (1)(a) A sale to a qualifying organization where the organization is exercising an option to repurchase the property is exempt from tax under this chapter.
     (b) A sale by a qualifying organization to a qualifying buyer is exempt from tax under this chapter.
     (2) The definitions in this subsection apply to this section.
     (a) "Qualifying buyer" has the same meaning as provided in section 1 of this act.
     (b) "Qualifying organization" means a nonprofit organization registered under RCW 82.32.030 that is primarily engaged in the business of building or rehabilitating residential housing units.
     (3) An exemption may not be claimed under this section for sales occurring on or after January 1, 2013.
     (4) This section expires July 1, 2013.