Property Tax—Revenue Limits. All real and personal property is subject to a tax each year based on the highest and best use, unless a specific exemption is provided by law. The annual growth of all regular property tax levy revenue is limited as follows:
The Washington Constitution provides for a levy rate limit of $10 per $1,000 of assessed value (AV), sometimes referred to as the constitutional $10 limit, or the constitutional 1 percent limit. There are individual district rate maximums and aggregate rate maximums to keep the total tax rate for regular property taxes within the constitutional limit. For example:
For property tax purposes, the state, counties, and cities are collectively referred to as senior taxing districts. Junior taxing districts—a term that includes fire, hospital, flood control zone, and most other special purpose districts—each have specific rate limits as well.
Property Tax Exemption for Nonprofit Organizations Providing Rental Housing or Mobile Home Park Spaces to Qualifying Households. Property tax exemptions are available to qualifying organizations, including schools, churches, nonprofit hospitals, nursing homes, museums, public meeting halls, and others.
Property owned or used by a nonprofit to provide rental housing for qualifying households or to provide space for the placement of a mobile home in a mobile home park is exempt from property taxation if:
If less than 75 percent of dwelling units are occupied by qualifying households, the property is eligible for a partial tax exemption. The amount of the exemption is equal to the assessed value of the property reasonably necessary to provide the housing multiplied by the percentage of units occupied by a qualifying household.
A qualifying household is defined as a single person, family, or unrelated persons living together whose income is at or below 60 percent of the median county income, adjusted for family size, as determined by the federal Department of Housing and Urban Development.
Real Estate Excise Tax. Real Estate Excise Tax (REET) applies to real estate transactions including the sale of property and the transfer of controlling interest in property. The rate applies to the selling price and is usually paid for by the seller. The REET is due and payable to the county treasurer in which the property is located on the date of the sale.
Prior to 2020, the state REET rate was a flat rate of 1.28 percent. But, beginning on January 1, 2020, four graduated rates of 1.1 percent, 1.28 percent, 2.75 percent, and 3 percent have applied based on the selling price of the property.
In addition to the state rate, local governments are authorized to impose a local REET. The two main local REET options are:
There are also several other local REET options for local governments:
The property tax exemption for real and personal property owned or used by a nonprofit entity providing rental housing for qualifying households or used to provide space for the placement of a mobile home is expanded to include an additional qualified funding source. Rental housing or lots in a mobile home park that were insured, financed, or assisted in whole or in part through the local option REET for affordable housing is exempt from property taxes.
This act is not subject to the requirements of a tax preference performance statement, a Joint Legislative Audit and Review Committee review, and the automatic ten-year expiration.