BILL REQ. #:  S-0183.2 

Read first time 01/13/2003.   Referred to Committee on Ways & Means.

     AN ACT Relating to property tax exemptions and deferrals for senior citizens and persons retired for reasons of physical disability; amending RCW 84.36.381, 84.36.383, 84.38.020, and 84.38.030; and creating a new section.

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

Sec. 1   RCW 84.36.381 and 1998 c 333 s 1 are each amended to read as follows:
     A person shall be exempt from any legal obligation to pay all or a portion of the amount of excess and regular real property taxes due and payable in the year following the year in which a claim is filed, and thereafter, in accordance with the following:
     (1) The property taxes must have been imposed upon a residence which was occupied by the person claiming the exemption as a principal place of residence as of the time of filing: PROVIDED, That any person who sells, transfers, or is displaced from his or her residence may transfer his or her exemption status to a replacement residence, but no claimant shall receive an exemption on more than one residence in any year: PROVIDED FURTHER, That confinement of the person to a hospital ((or)), nursing home, adult family home, or boarding home that provides enhanced adult residential care or assisted living services, as defined in RCW 74.39A.009, shall not disqualify the claim of exemption if:
     (a) The residence is temporarily unoccupied;
     (b) The residence is occupied by a spouse and/or a person financially dependent on the claimant for support; or
     (c) The residence is rented for the purpose of paying costs of a nursing home ((or)), hospital ((costs)), adult family home, or boarding home that provides enhanced adult residential care or assisted living services, as defined in RCW 74.39A.009;
     (2) The person claiming the exemption must have owned, at the time of filing, in fee, as a life estate, or by contract purchase, the residence on which the property taxes have been imposed or if the person claiming the exemption lives in a cooperative housing association, corporation, or partnership, such person must own a share therein representing the unit or portion of the structure in which he or she resides. 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, and any lease for life shall be deemed a life estate;
     (3) The person claiming the exemption must be sixty-one years of age or older on December 31st of the year in which the exemption claim is filed, or must have been, at the time of filing, retired from regular gainful employment by reason of physical disability: PROVIDED, That any surviving spouse of a person who was receiving an exemption at the time of the person's death shall qualify if the surviving spouse is fifty-seven years of age or older and otherwise meets the requirements of this section;
     (4) The amount that the person shall be exempt from an obligation to pay shall be calculated on the basis of combined disposable income, as defined in RCW 84.36.383. If the person claiming the exemption was retired for two months or more of the assessment year, the combined disposable income of such person shall be calculated by multiplying the average monthly combined disposable income of such person during the months such person was retired by twelve. If the income of the person claiming exemption is reduced for two or more months of the assessment year by reason of the death of the person's spouse, or when other substantial changes occur in disposable income that are likely to continue for an indefinite period of time, the combined disposable income of such person shall be calculated by multiplying the average monthly combined disposable income of such person after such occurrences by twelve. If it is necessary to estimate income to comply with this subsection, the assessor may require confirming documentation of such income prior to May 31 of the year following application;
     (5)(a) A person who otherwise qualifies under this section and has a combined disposable income of ((thirty)) thirty-five thousand dollars or less shall be exempt from all excess property taxes; and
     (b)(i) A person who otherwise qualifies under this section and has a combined disposable income of ((twenty-four)) twenty-eight thousand dollars or less but greater than ((eighteen)) twenty-one thousand dollars shall be exempt from all regular property taxes on the greater of ((forty)) forty-six thousand dollars or thirty-five percent of the valuation of his or her residence, but not to exceed ((sixty)) sixty-nine thousand dollars of the valuation of his or her residence; or
     (ii) A person who otherwise qualifies under this section and has a combined disposable income of ((eighteen)) twenty-one thousand dollars or less shall be exempt from all regular property taxes on the greater of ((fifty)) fifty-eight thousand dollars or sixty percent of the valuation of his or her residence; and
     (6) For a person who otherwise qualifies under this section and has a combined disposable income of ((thirty)) thirty-five thousand dollars or less, the valuation of the residence shall be the assessed value of the residence on the later of January 1, 1995, or January 1st of the assessment year the person first qualifies under this section. If the person subsequently fails to qualify under this section only for one year because of high income, this same valuation shall be used upon requalification. If the person fails to qualify for more than one year in succession because of high income or fails to qualify for any other reason, the valuation upon requalification shall be the assessed value on January 1st of the assessment year in which the person requalifies. If the person transfers the exemption under this section to a different residence, the valuation of the different residence shall be the assessed value of the different residence on January 1st of the assessment year in which the person transfers the exemption.
     In no event may the valuation under this subsection be greater than the true and fair value of the residence on January 1st of the assessment year.
     This subsection does not apply to subsequent improvements to the property in the year in which the improvements are made. Subsequent improvements to the property shall be added to the value otherwise determined under this subsection at their true and fair value in the year in which they are made.

Sec. 2   RCW 84.36.383 and 1999 c 358 s 18 are each amended to read as follows:
     As used in RCW 84.36.381 through 84.36.389, except where the context clearly indicates a different meaning:
     (1) The term "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, except that a residence includes any additional property up to a total of five acres that comprises the residential parcel if this larger parcel size is required under land use regulations. The term shall also include a share ownership in a cooperative housing association, corporation, or partnership if the person claiming exemption can establish that his or her share represents the specific unit or portion of such structure in which he or she resides. The term shall also include 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 the provisions of RCW 84.04.080 and 84.04.090, such a residence shall be deemed real property.
     (2) The term "real property" shall also include 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. A mobile home located on land leased by the owner of the mobile home is subject, for tax billing, payment, and collection purposes, only to the personal property provisions of chapter 84.56 RCW and RCW 84.60.040.
     (3) "Department" means the state department of revenue.
     (4) "Combined disposable income" means the disposable income of the person claiming the exemption, plus the disposable income of his or her spouse, and the disposable income of each cotenant occupying the residence for the assessment year, less amounts paid by the person claiming the exemption or his or her spouse during the assessment year for:
     (a) Drugs supplied by prescription of a medical practitioner authorized by the laws of this state or another jurisdiction to issue prescriptions; ((and))
     (b) The treatment or care of either person received in the home or in a nursing home, adult family home, or boarding home that provides enhanced adult residential care or assisted living services, as defined in RCW 74.39A.009; and
     (c) Health care insurance of either person, including any deduction for medicare under Title XVIII of the social security act.
     (5) "Disposable income" means adjusted gross income as defined in the federal internal revenue code, as amended prior to January 1, 1989, or such subsequent date as the director may provide by rule consistent with the purpose of this section, plus all of the following items to the extent they are not included in or have been deducted from adjusted gross income:
     (a) Capital gains, other than gain excluded from income under section 121 of the federal internal revenue code to the extent it is reinvested in a new principal residence;
     (b) Amounts deducted for loss;
     (c) Amounts deducted for depreciation;
     (d) Pension and annuity receipts;
     (e) Military pay and benefits other than attendant-care and medical-aid payments;
     (f) Veterans benefits other than attendant-care and medical-aid payments and benefits for disabilities related to the performance of military duties;
     (g) Federal social security act and railroad retirement benefits;
     (h) Dividend receipts; and
     (i) Interest received on state and municipal bonds.
     (6) "Cotenant" means a person who resides with the person claiming the exemption and who has an ownership interest in the residence.

Sec. 3   RCW 84.38.020 and 1997 c 93 s 1 are each amended to read as follows:
     Unless a different meaning is plainly required by the context, the following words and phrases as hereinafter used in this chapter shall have the following meanings:
     (1) "Claimant" means a person who either elects or is required under RCW 84.64.050 to defer payment of the special assessments and/or real property taxes accrued on the claimant's residence by filing a declaration to defer as provided by 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 the claimant shall be.
     (2) "Department" means the state department of revenue.
     (3) "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.
     (4) "Local government" means any city, town, county, water-sewer district, public utility district, port district, irrigation district, flood control district, or any other municipal corporation, quasi-municipal corporation, or other political subdivision authorized to levy special assessments.
     (5) "Real property taxes" means ad valorem property taxes levied on a residence in this state in the preceding calendar year.
     (6) "Residence" has the meaning given in RCW 84.36.383((, except that a residence includes any additional property up to a total of five acres that comprises the residential parcel if this larger parcel size is required under land use regulations)).
     (7) "Special assessment" means the charge or obligation imposed by a local government upon property specially benefited.

Sec. 4   RCW 84.38.030 and 1995 c 329 s 2 are each amended to read as follows:
     A claimant may defer payment of special assessments and/or real property taxes on up to eighty percent of the amount of the claimant's equity value in the claimant's residence if the following conditions are met:
     (1) The claimant must meet all requirements for an exemption for the residence under RCW 84.36.381, other than the age and income limits under RCW 84.36.381 ((and the parcel size limit under RCW 84.36.383)).
     (2) The claimant must be sixty years of age or older on December 31st of the year in which the deferral claim is filed, or must have been, at the time of filing, retired from regular gainful employment by reason of physical disability: PROVIDED, That any surviving spouse of a person who was receiving a deferral at the time of the person's death shall qualify if the surviving spouse is fifty-seven years of age or older and otherwise meets the requirements of this section.
     (3) The claimant must have a combined disposable income, as defined in RCW 84.36.383, of ((thirty-four)) thirty-nine thousand dollars or less.
     (4) The claimant must have owned, at the time of filing, the residence on which the special assessment and/or 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.
     (5) 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: PROVIDED, That 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.
     (6) In the case of special assessment deferral, the claimant must have opted for payment of such special assessments on the installment method if such method was available.

NEW SECTION.  Sec. 5   This act applies to taxes levied for collection in 2004 and thereafter.