Washington State House of Representatives Office of Program Research | BILL ANALYSIS |
Finance Committee |
HB 2120
This analysis was prepared by non-partisan legislative staff for the use of legislative members in their deliberations. This analysis is not a part of the legislation nor does it constitute a statement of legislative intent. |
Brief Description: Concerning a leasehold excise tax credit for properties of market value in excess of ten million dollars.
Sponsors: Representatives Fitzgibbon, Takko, Farrell and Walkinshaw.
Brief Summary of Bill |
|
Hearing Date: 2/23/15
Staff: Jeffrey Mitchell (786-7139).
Background:
State leasehold excise taxes are levied and collected on the act or privilege of occupying or using publicly owned real or personal property through a leasehold interest. A "leasehold interest" is an interest in publicly owned real or personal property which exists by virtue of any lease, permit, license, or other written or verbal agreement between a public owner and a person who would not be exempt from property taxes if that person owned the property. The leasehold excise tax is levied at a rate of 12 percent of taxable rent (i.e., the contract rent).
The legislative body of any county or town may also levy and collect a leasehold excise tax on leasehold interests in publicly owned property within the territorial limits of the county or city. The tax levied by a county may not exceed 6 percent of taxable rent and, by a city, may not exceed 4 percent of taxable rent. After a state leasehold excise tax has been computed a credit is allowed for any county or city leasehold excise tax.
Until 2013, in determining the amount of tax payable, a credit was allowed for certain leasehold interests where the leasehold excise tax exceeded the amount of property tax that would have otherwise applied to the property if it were privately owned by the lessee or sub-lessee. In 2013, the credit was repealed as part of a bill that completely eliminated the requirement for county assessors to value publicly owned property for property tax purposes since this property is exempt from property tax.
Summary of Bill:
A credit is allowed against the leasehold excise tax for leasehold interests in real property where the leasehold excise tax exceeds the property tax that would apply if the real property was privately owned. The real property parcel must exceed 10 million dollars in market value. If the parcel does not have a current assessed value, a market value appraisal performed by a Washington state-certified general real estate appraiser can be used.
Appropriation: None.
Fiscal Note: Available.
Effective Date: The bill takes effect 90 days after adjournment of the session in which the bill is passed.