AN ACT Relating to providing property tax relief to preserve home ownership; amending RCW 84.36.379, 84.36.383, and 84.36.385; adding a new section to chapter 84.36 RCW; adding a new section to chapter 43.20A RCW; and creating new sections.

NEW SECTION. Sec. 1. (1) This section is the tax preference performance statement for the tax preference provided in section 2, chapter . . ., Laws of 2019 (section 2 of this act). The performance statement is only intended to be used for subsequent evaluation of the tax preference. It is not intended to create a private right of action by any party or be used to determine eligibility for preferential tax treatment.

(3) It is the legislature's specific public policy objective to encourage residential property owners to remain in their place of residence by expanding an existing property tax relief program for persons retired by reason of age or disability.

(4) To measure the effectiveness of the tax preferences in this act in achieving the public policy objective described in subsection (3) of this section, the joint legislative audit and review committee must evaluate the tax preference provided in section 2, chapter . . ., Laws of 2019 (section 2 of this act) by January 1, 2029.

(5) In order to obtain the data necessary to perform the review in subsection (4) of this section, the department of revenue must provide the data specified in RCW 84.36.385. In addition to the data source described under this subsection, the joint legislative audit and review committee may use any other data it deems necessary.

A person is exempt from any legal obligation to pay the state property tax imposed under RCW 84.52.065(1) 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 tax 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. However, 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 may receive an exemption on more than one residence in any year. Moreover, confinement of the person to a hospital, nursing home, assisted living facility, or adult family home does not disqualify the claim of exemption if:

(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 tax has 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 state registered domestic partnership or owned by cotenants is deemed to be owned by each spouse or each domestic partner or each cotenant, and any lease for life is deemed a life estate;

(i) Sixty-five 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 disability; or

(ii) A veteran of the armed forces of the United States entitled to and receiving compensation from the United States department of veterans affairs at a total disability rating for a service-connected disability.

(b) However, any surviving spouse or surviving domestic partner of a person who was receiving an exemption at the time of the person's death will qualify if the surviving spouse or surviving domestic partner is fifty-seven years of age or older and otherwise meets the requirements of this section;

(4) If the person claiming the exemption was retired for two months or more of the assessment year, the combined disposable income of such person must 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 the person's domestic partner, 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 must 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;

(6) A person must have been a Washington resident for at least the prior fifteen years at the time of application if the person would otherwise qualify on the basis of age as provided in subsection (3) of this section;

(7)(a) For a person who otherwise qualifies under this section for an exemption, the valuation of the residence is the assessed value of the residence on 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 must 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 is 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 is the assessed value of the different residence on January 1st of the assessment year in which the person transfers the exemption.

(c) 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 must be added to the value otherwise determined under this subsection at their true and fair value in the year in which they are made.

(d) If a person qualifies for the exemption under RCW 84.36.381 in a year immediately subsequent to a year in which the person qualifies under this section, the valuation of the residence under this subsection (7) continues to apply;

(8) Initial applications for the property tax exemption under this section may not be accepted on or after January 1, 2029. Property owners qualifying for property tax relief under this section in calendar year 2028 may continue to submit renewal applications after January 1, 2029.

The legislature finds that the property tax exemption authorized by Article VII, section 10 of the state Constitution should generally be made available on the basis of a retired person's ability to pay property taxes and that the best measure of a retired person's ability to pay taxes is that person's disposable income as defined in RCW 84.36.383. The legislature further finds that veterans with one hundred percent service-connected disabilities have given so much to our country that they deserve property tax relief. The legislature further finds that substantial increases in property values in recent years have made it increasingly difficult for many persons to remain in their homes thereby increasing the need to expand property tax relief to a broader range of older or disabled individuals.

(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 also includes 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 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 the provisions of RCW 84.04.080 and 84.04.090, such a residence is deemed real property.

(2) The term "real property" also 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. 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.

(4) "Combined disposable income" means the disposable income of the person claiming the exemption, plus the disposable income of his or her spouse or domestic partner, 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 or domestic partner during the assessment year for:

(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:

(7) "Disability" has the same meaning as provided in 42 U.S.C. Sec. 423(d)(1)(A) as amended prior to January 1, 2005, or such subsequent date as the department may provide by rule consistent with the purpose of this section.

(8) "County median residential assessed value" means the median single family residential value for the county, as most recently determined by the department at the time the property owner submits an initial or renewal application under RCW 84.36.385. County median residential assessed values must be adjusted by the combined indicated ratio and the calculation must exclude vacant parcels and parcels with no taxable value. Counties must provide the department with single-family residential values on an annual basis within two weeks after the assessment rolls have been certified for the tax year.

(1) A claim for exemption under RCW 84.36.381 or section 2 of this act as now or hereafter amended, may be made and filed at any time during the year for exemption from taxes payable the following year and thereafter and solely upon forms as prescribed and furnished by the department ((of revenue)). However, an exemption from tax under RCW 84.36.381 continues for no more than six years unless a renewal application is filed as provided in subsection (3) of this section.

(2) A person granted an exemption under RCW 84.36.381 must inform the county assessor of any change in status affecting the person's entitlement to the exemption on forms prescribed and furnished by the department ((of revenue)). A person who qualifies under section 2(5)(b) of this act based on the assessed value of the applicant's residence must establish that the person's assessed value qualifies under section 2(5) of this act only at the time the person submits an initial or renewal application.

(3) Each person exempt from taxes under RCW 84.36.381 or section 2 of this act in 1993 and thereafter((,)) must file with the county assessor a renewal application not later than December 31st of the year the assessor notifies such person of the requirement to file the renewal application. Renewal applications must be on forms prescribed and furnished by the department ((of revenue)).

(4) At least once every six years, the county assessor must notify those persons receiving an exemption from taxes under RCW 84.36.381 of the requirement to file a renewal application. The county assessor may also require a renewal application following an amendment of the income requirements set forth in RCW 84.36.381 or section 2 of this act.

(5) If the assessor finds that the applicant does not meet the qualifications as set forth in RCW 84.36.381 or section 2 of this act, as now or hereafter amended, the claim or exemption must be denied but such denial is subject to appeal under the provisions of RCW 84.48.010 and in accordance with the provisions of RCW 84.40.038. If the applicant had received exemption in prior years based on erroneous information, the taxes must be collected subject to penalties as provided in RCW 84.40.130 for a period of not to exceed five years.

(6) The department and each local assessor is hereby directed to publicize the qualifications and manner of making claims under RCW 84.36.381 through 84.36.389, through communications media, including such paid advertisements or notices as it deems appropriate. Notice of the qualifications, method of making applications, the penalties for not reporting a change in status, and availability of further information must be included on or with property tax statements and revaluation notices for all residential property including mobile homes, except rental properties.

(7) County assessors must include, as part of the county's parcel assessment data, information indicating whether a parcel qualifies for an exemption under RCW 84.36.381 and section 2 of this act, as well as the specific level of exemption under RCW 84.36.381(5). County assessors must provide the department with this data on an annual basis within two weeks after the assessment rolls have been certified for the tax year.

NEW SECTION. Sec. 6. It is the legislature's intent to fund the expanded state tax relief provided in this act through the additional remote seller sales tax revenues resulting from the United States supreme court decision in South Dakota v. Wayfair.

The department of social and health services must work with nursing homes, assisted living facilities, and adult family homes to obtain data regarding the number of individuals residing in these facilities that currently or formerly claimed the exemption under RCW 84.36.381 or section 2 of this act for their place of residence.