Washington State

House of Representatives

Office of Program Research

BILL

ANALYSIS

Finance Committee

HB 1532

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 Summary of Bill

Clarifies the property tax exemption for nonprofit homeownership development by specifying that land that is to be leased for 99 years or life to a low-income household is included in the exemption.
Specifies that the lease of the exempted land to a low-income household terminates the property tax exemption.

Background:

Property Tax.

All property in Washington State is subject to property tax each year based on the highest and best use of the property, unless a specific exemption is provided by law. Property tax exemptions are currently made available to qualifying organizations including schools, churches, nonprofit hospitals, nursing homes, museums, public meeting halls, and others.

Property Tax Exemption for Low-Income Housing Development.

Property that is owned by a nonprofit for the purpose of developing residences on the property for low-income households is exempt from state and local property taxes for a limited term. So long as the property remains held for the purpose of low-income housing development, the exemption lasts for seven consecutive tax years or until the nonprofit sells the property. Should the nonprofit anticipate that they will be unable to sell the property within the seven-year term, they may file for a three-year extension by filing a notice of extension with the Department of Revenue and paying a filing fee.

The property is disqualified from the exemption if:

The nonprofit fails to sell the property to a low-income household within the applicable exemption period; or
The property is converted to a use other than low-income housing development.

In this case, an additional tax equal to all taxes that would have been previously due without the exemption, plus interest, is due. This additional tax is considered a lien on the property.

Summary of Bill:

The exemption for real property owned by a nonprofit for the purpose of developing residences for low-income households is clarified to specify that the land upon which a residence stands that is to be leased for life or 99 years to the low-income household qualifies for the exemption. The conditions of the duration of the exemption are clarified such that the exemption will end when a lease of the land is executed. The sale of the dwelling-unit by the nonprofit is clarified to be the relevant trigger to various conditions of the exemption. The exemption is set to expire on January 1, 2027.