BP BHEAD INT S

AN ACT Relating to the deferral of property taxes; adding a new chapter to Title 84 RCW; and providing a contingent effective date.

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

NEW SECTION. Sec. 1. With the rapid rise in residential property values, it has become increasingly difficult for many homeowners to pay the increased taxes resulting from this rise in valuation. The legislature intends to allow persons to defer payment of property taxes on their principal residences to the extent that the taxes exceed the increase in inflation. This deferral program is intended to assist persons in maintaining their homes by easing the increases in tax.

NEW SECTION. Sec. 2. Unless the context clearly requires otherwise, the definitions in this section apply throughout this chapter.

(1) "Claimant" means a person who elects to defer payment of the real property taxes accrued on his or her residence by filing a declaration to defer as provided in this chapter. When two or more individuals of a household file or seek to file a declaration to defer, they may determine between them as to who is the claimant.

(2) "Cotenant" means a person who resides with the claimant and who has an ownership interest in the residence.

(3) "Department" means the state department of revenue.

(4) "Equity value" means the amount by which the fair market value of a residence as determined from the records of the county assessor exceeds the total amount of any liens or other obligations against the property.

(5) "Inflation" means the change in the consumer price index for all urban consumers for the Seattle, Washington area, all items, as compiled by the bureau of labor statistics, United States department of labor for the year prior to the year the property taxes are due.

(6) "Real property" includes a mobile home which has substantially lost its identity as a mobile unit by virtue of its being fixed in location upon land owned or leased by the owner of the mobile home and placed on a foundation (posts or blocks) with fixed pipe, connections with sewer, water, or other utilities: PROVIDED, That a mobile home located on land leased by the owner of the mobile home shall be subject, for tax billing, payment, and collection purposes, only to the personal property provisions of chapter 84.56 RCW and RCW 84.60.040.

(7) "Real property taxes" means ad valorem property taxes levied on a residence in this state in the preceding calendar year.

(8) "Residence" means a single-family dwelling unit whether such unit be separate or part of a multiunit dwelling, including the land on which such dwelling stands not to exceed one acre. The term also includes a single-family dwelling situated upon lands the fee of which is vested in the United States or any instrumentality thereof including an Indian tribe or in the state of Washington, and notwithstanding RCW 84.04.080 and 84.04.090, such a residence shall be deemed real property.

NEW SECTION. Sec. 3. (1) A claimant may defer that portion of the increase in real property taxes on the claimant's principal residence from the previous year that exceed inflation for 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 which was occupied by the claimant as a principal place of residence.

(d) A deferral is not allowed under this section before the residence has been valued or revalued to true and fair value once after December 31, 1995, in accordance with the approved revaluation cycle for the county.

(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.

NEW SECTION. Sec. 4. (1) A claimant electing to defer payment of real property tax obligations under this chapter shall file with the county assessor, on forms prescribed by the department and supplied by the assessor, a written declaration thereof. The declaration to defer real property taxes for a year shall be filed no later than thirty days before the tax is due. The department may waive this requirement for good cause.

(2) The declaration shall designate the property to which the deferral applies and shall include a statement setting forth: (a) A list of all members of the claimant's household who have an ownership interest in the residence; (b) the claimant's equity value in the residence; and (c) any other relevant information required by the rules of the department. The claimant shall sign each copy, subject to the penalties for false swearing under RCW 9A.72.040.

(3) The county assessor shall determine if each claimant shall be granted a deferral for each year, but the claimant is entitled to appeal this determination to the county board of equalization whose decision shall be final as to the deferral of that year.

NEW SECTION. Sec. 5. A duly authorized agent or a guardian or other person charged with care of the person or property of a claimant may make a declaration of deferral.

NEW SECTION. Sec. 6. If the claimant declaring his or her intention to defer real property taxes under this chapter ceases to reside permanently on the property for which the declaration to defer is made between the date of filing the declaration and December 15th of that year, the deferral otherwise allowable under this chapter shall not be allowed for that claimant. However, this section does not apply where the claimant dies, leaving a surviving spouse, or other cotenant, who would have qualified for the deferral and who elects to continue the deferral.

NEW SECTION. Sec. 7. If a residence is under mortgage or purchase contract requiring accumulation of reserves out of which the holder of the mortgage or contract is required to pay real estate taxes, the holder shall cosign the declaration of deferral either before a notary public or the county assessor or the county assessor's deputy in the county where the real property is located.

NEW SECTION. Sec. 8. Whenever a person's real property taxes are deferred under this chapter, the amount deferred and required to be paid under section 11 of this act shall become a lien in favor of the state upon his or her property and shall have priority as provided in chapters 35.50 and 84.60 RCW: PROVIDED, That the interest of a mortgage or purchase contract holder who is required to cosign a declaration of deferral under section 7 of this act shall have priority to the deferred lien. This lien may accumulate up to eighty percent of the amount of the claimant's equity value in the property and shall bear interest from the time it could have been paid before delinquency until the obligation is paid. The rate of interest shall be variable and shall be computed as provided in RCW 82.32.050(2).

In the case of a mobile home, the department of licensing shall show the state's lien on the certificate of ownership for the mobile home. In the case of all other property, the department of revenue shall file a notice of the deferral with the county recorder or auditor.

NEW SECTION. Sec. 9. The county assessor shall:

(1) Immediately transmit one copy of each declaration to defer to the department. The department may audit any declaration and shall notify the assessor as soon as possible of any claim where any factor appears to disqualify the claimant for the deferral sought;

(2) Compute the dollar tax rate for the county as if any deferrals provided by this chapter did not exist;

(3) As soon as possible notify the department and the treasurers of the affected taxing district of the amount of real property taxes deferred for that year.

NEW SECTION. Sec. 10. The county legislative authority may, by ordinance, impose a fee to be collected by the county assessor to cover the costs of implementing this chapter.

NEW SECTION. Sec. 11. Real property tax obligations deferred under this chapter shall become payable together with interest as provided in section 8 of this act:

(1) Upon the sale of property which has a deferred real property tax lien upon it;

(2) Upon the death of the claimant with an outstanding deferred real property tax lien, except as provided in section 13 of this act;

(3) Upon the condemnation of property with a deferred real property tax lien upon it by a public or private body exercising eminent domain power, except as otherwise provided in RCW 84.60.070;

(4) At such time as the claimant ceases to reside permanently in the residence upon which the deferral has been granted; or

(5) Upon the failure of any condition set forth in section 3(2) of this act.

NEW SECTION. Sec. 12. (1) The county treasurer shall collect all the amounts deferred together with interest under this chapter, in the manner provided for in chapter 84.56 RCW. For purposes of collection of deferred taxes, the provisions of chapters 84.56, 84.60, and 84.64 RCW shall be applicable.

(2) When any deferred real property taxes together with interest are collected the moneys shall be credited to a special account in the county treasury.

(3) The county treasurer shall remit the amounts, equivalent to the amount of real property taxes deferred plus interest, within thirty days of the date of collection to the treasurers of the taxing districts which levied the taxes so deferred. State taxes and interest shall be remitted to the department within thirty days from the date of collection. The department shall deposit the deferred taxes and interest in the state general fund.

NEW SECTION. Sec. 13. (1) Upon the death of the claimant, a surviving spouse of the claimant or other cotenant may elect to continue the property in its deferred tax status if the property is the residence of the spouse or cotenant and the spouse or cotenant elects to continue the deferral.

(2) The election under this section to continue the property in its deferred status shall be filed in the same manner as an original claim for deferral is filed under this chapter, not later than ninety days from the date of the claimant's death. Thereupon, the property with respect to which the deferral of real property taxes is claimed shall continue to be treated as deferred property.

NEW SECTION. Sec. 14. A person may at any time pay a part or all of the deferred taxes, but the payment shall not affect the deferred tax status of the property.

NEW SECTION. Sec. 15. Nothing in this chapter is intended to prevent the collection, by foreclosure, of personal property taxes which become a lien against tax‑deferred property.

NEW SECTION. Sec. 16. The department shall design forms and adopt rules under chapter 34.05 RCW to administer this chapter.

NEW SECTION. Sec. 17. Sections 1 through 16 of this act shall constitute a new chapter in Title 84 RCW.

NEW SECTION. Sec. 18. This act shall take effect on January 1, 1995, if the proposed amendment to Article VII of the state Constitution (SJR --) (S-1236.2/95) is validly submitted to and is approved and ratified by the voters at a general election held in November, 1995. If the proposed amendment is not so approved and ratified, this act shall be null and void in its entirety.