SENATE BILL REPORT
SHB 1097
BYHouse Committee on Revenue (originally sponsored by Representatives Appelwick, Locke, O'Brien, Kremen, R. King and Sprenkle)
Exempting property used by homes for the aged from taxation.
House Committe on Revenue
Senate Committee on Ways & Means
Senate Hearing Date(s):March 30, 1989; April 3, 1989
Majority Report: Do pass as amended.
Signed by Senators McDonald, Chairman; Craswell, Vice Chairman; Amondson, Bailey, Bluechel, Cantu, Hayner, Johnson, Moore, Newhouse, Owen, Smith, Talmadge, Williams, Wojahn.
Senate Staff:Terry Wilson (786-7715)
April 4, 1989
AS REPORTED BY COMMITTEE ON WAYS & MEANS, APRIL 3, 1989
BACKGROUND:
Nonprofit homes for the aged are exempt from the property tax.
In the 1965 and 1967 sessions of the Legislature, attempts were made to repeal the property tax exemption for these retirement homes. The primary issue was the inequity of treatment between senior citizens living in their own taxable residences and senior citizens living in an exempt facility.
In 1966, the Legislature proposed and the voters approved a constitutional amendment which authorized the Legislature to grant retired property owners relief from the property tax on their personal residences. The exemption under the implementing legislation in 1967 was $50 but was changed to an income basis in 1971. The current exemption applies to persons who are at least 62 years of age or who are retired because of physical disability. Under the current exemption, persons with incomes below $18,000 receive some relief from the property tax. The exemption increases as income decreases.
Because the property tax exemption for nonprofit homes for the aged provides no income restrictions, an inequity of treatment exists between senior citizens living in their own taxable residences and senior citizens living in an exempt facility.
SUMMARY:
Homes for the aging are exempt from property tax if 50 percent of the occupied dwelling units in the homes are occupied by eligible residents. Eligibility is tied to the senior citizen property tax exemption.
Federally subsidized homes under programs operated by the U.S. Department of Housing and Urban Development are exempt from property tax. The Department of Revenue is required to provide a definition of these federal programs.
Homes that cannot meet the 50 percent residency or federal subsidy requirements are entitled to exemption from property tax of 2 percent of the assessed value of the home for each 1 percent of the dwelling units that are occupied by eligible residents.
To be eligible for tax exemption, a home must receive an income tax exemption under section 501(c) of the Internal Revenue Code.
For a home that will lose all or a portion of its exemption because of this act, the existing exemption is phased out. For taxes levied for collection in 1991, two-thirds of the taxable assessed value is exempt. For taxes levied for collection in 1992, one-third of the taxable assessed value is exempt.
A home for the aging is not subject to back taxes if a portion of the home becomes taxable because of changes in the number of eligible residents. A previously exempt home for the aging will not be liable to back taxes as a result of the phasing out of its exemption under this act.
The incorporation by reference of federal Internal Revenue Code provisions is updated to January 1, 1989, or such later date as provided by the Director of Revenue by rule.
SUMMARY OF PROPOSED COMMITTEE AMENDMENT:
The bill is reorganized for easier understanding after codification, and the effective date is delayed until April 1, 1990.
Appropriation: none
Revenue: yes
Fiscal Note: available
Senate Committee - Testified: Representative Karen Fraser (pro); Kay Boyd, Mayor, City of Lacey (pro); Stan Finkelstein, Association of Washington Cities (pro); Karen Tynes, Washington Association of Homes for the Aging (pro); Mark Allen, Washington Library Association (pro); Arlene Temple, Exeter House (con); Jean Young, Exeter House (con); Gordon Young, Exeter House (con)