BP BHEAD INT S [atlas:bill]

AN ACT Relating to valuation for property tax purposes; adding new sections to chapter 84.40 RCW; creating a new section; and providing a contingent effective date.

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

NEW SECTION. Sec. 1. The intent of this act is to provide property tax relief by limiting property tax valuation increases to six percent per year until the ownership of the property changes.

NEW SECTION. Sec. 2. (1) As used in section 3 of this act, "change of ownership" means a transfer of a present interest in real property, including a transfer of the beneficial use of real property.

(2) "Change of ownership" includes, except as provided in subsections (3) and (4) of this section, the following:

(a) Contracting to convey the title to or ownership of real property upon the fulfillment of one or more stated conditions where the right to possession of the property is transferred currently.

(b) The creation, transfer, or termination of a joint tenancy interest.

(d) The vesting of a right of possession or enjoyment of a remainder or reversionary interest that occurs upon the termination of a life estate or other similar precedent property interest.

(e) An interest that vests in persons other than the trustor where a revocable trust becomes irrevocable.

(f) The transfer of stock of a cooperative housing corporation, vested with legal title to real property, that conveys to the transferee the exclusive right to occupancy and possession of such property, or a portion of the property.

(3) "Change of ownership" does not include:

(a) A transfer between co-owners that results in a change in the method of holding title to the real property transferred without changing the proportional interests of the co-owners in the real property, such as a partition of a tenancy-in-common.

(b) A transfer for the purpose of merely perfecting title to the real property.

(c) The creation, assignment, termination, or reconveyance of a security interest in real property; or the substitution of a trustee under a security instrument.

(d) A transfer of real property by the trustor, or by the trustor's spouse, or by both, into a trust for so long as the transferor is the sole present beneficiary of the trust, or the trust is revocable; or any transfer of real property by a trustee of such trust back to the trustor.

(e) A transfer of real property by an instrument whose terms reserve to the transferor an estate for years or an estate for life. However, the termination of such an estate for years or life estate shall constitute a change of ownership.

(f) A transfer of real property between or among the same parties for the purpose of correcting or reforming a deed to express the true intention of the parties, if the original relationship between the grantor and grantee is not changed.

(4) "Change of ownership" also does not include an interspousal transfer of real property, including, but not limited to:

(a) Transfers to a trustee for the beneficial use of a spouse, or the surviving spouse of a deceased transferor, or by a trustee of such trust to the spouse of the trustor;

(b) Transfers that take effect upon the death of a spouse;

(c) Transfers to a spouse or former spouse in connection with a property settlement agreement or decree of dissolution of marriage or legal separation; and

(d) The creation, transfer, or termination, solely between spouses, of any co-owner's interest.

NEW SECTION. Sec. 3. (1) The assessed value of real property for which there has been a change of ownership since the previous assessment shall be equal to true and fair value as determined under RCW 84.40.030.

(2) The assessed value of real property that is not assessed under subsection (1) of this section, shall be equal to the lesser of the following values at the time of valuation:

(a) True and fair market value as established by the county assessor in accordance with applicable law; or

(b) The most recent assessed value of the property increased on January 1 each year thereafter by the lesser of the rate of inflation or two percent, compounded annually, plus the portion of the true and fair market value attributable to any construction or alteration not included in the previous assessment, other than improvements exempt under RCW 84.36.400 for the assessment year.

NEW SECTION. Sec. 4. Sections 2 and 3 of this act are each added to chapter 84.40 RCW.

NEW SECTION. Sec. 5. This act shall take effect January 1, 2000, if the proposed amendment to the state Constitution authorizing limitation of taxation in the manner provided by section 3 of this act is validly submitted to and is approved and ratified by the voters at a general election held in November 1999. If the proposed amendment is not so approved and ratified, this act is void in its entirety.