The Washington State Constitution requires that state and local property taxes be uniform within each class of property.  Real property constitutes a single class of property under the Constitution.  Uniformity requires both an equal rate of tax and equality in valuing the property.  Under the constitution, the Legislature may, by general laws, exempt property from taxation.  Based on the uniformity requirement, differential treatment of different types of real property is disallowed.

All real and personal property in the state is subject to property tax each year based on its value, unless a specific exemption is provided by law.  The Washington Constitution limits regular property tax levies to a maximum of 1 percent of the property's value.  Excess levies are not subject to this constitutional limit and require voter approval.  There are statutory rate maximums for individual taxing districts and aggregate rate maximums to keep the total tax rate of regular property taxes within the constitutional limit.

All regular levies are subject to a statutory annual revenue growth limit. If a taxing authority has a population of 10,000 or more, the revenue growth limit is the lesser of inflation or 1 percent plus the valuation of new construction. This is the annual revenue growth limit applicable to state property taxes. If the taxing authority has a population of less than 10,000, the revenue growth limit is 1 percent plus the value of new construction.

The state collects two regular property tax levies for common schools.  The original state levy  predates statehood in 1889.  In 2017 the Legislature created a second state levy.  The combined statutory maximum rate for the state property tax is $3.60 per $1,000 market value.  For taxes levied for collection in calendar years 2018, 2020, and 2021, the combined rate for both state levies was $2.70 per $1,000 of assessed value (AV).  For taxes levied for collection in calendar year 2019, the combined rate for both state levies was $2.40 per $1,000 assessed value.  The revenue growth limit did not apply to the state levies during this time.  Beginning with taxes levied for collection in calendar year 2022 and thereafter, the revenue growth limit applies to both levies and the rate is calculated based on the total levy amount.  The current combined state property tax rate for 2024 is $2.20 per $1,000 AV.

Current law does not provide for a homeowner relief property tax exemption.

A homeowner relief property tax exemption is created that would exempt a portion of the assessed value of a residence.  The exemption amount is the greater of $100,000 or 60 percent of the county median home value as of the most recent data published by the Department of Revenue (DOR), rounded to the nearest $1,000. The DOR must adjust the percent of the median value exempted downward if part 1 and part 2 of the state school levy are expected to exceed the combined statutory maximum rate of $3.60 per $1,000 market value.

The homeowner relief property tax exemption would be administered in part by the DOR and local county assessors. The DOR will process applications for the exemption and provide the county assessors with a list of all claimants, parcels and other information necessary for the assessor to determine eligibility. The county assessors will make the final determination on whether the applicant?s property qualifies for the exemption and will apply the exemption to the applicant?s qualifying property.

The exemption cannot exceed the value of a parcel and does not apply to any local property tax levies.

The homeowner relief property tax exemption is limited to only one residential parcel owned in fee or by contract purchase as the claimant's principal residence.  This includes:

• residential parcels consisting of less than five dwelling units, including single-family dwellings on government and tribal owned land, and mobile homes fixed in location;
• residential units in a multiunit residential dwelling, provided each unit is owned and taxed separately;
• residential floating homes;
• residences in cooperative housing associations and mobile/manufactured home park cooperatives if the exemption passes through to the claimant; and
• life estates under certain criteria.

The homeowner relief property tax exemption:

• requires a claimant to file a signed application with the DOR by April 1st of the year preceding the exemption;
• the exemption remains in place until the property is sold, transferred, or the claimant no longer qualifies due to a change of use as a principal place of residence;
• requires a claimant to immediately inform the county assessor, on forms created or approved by DOR, of any change in status affecting the claimant's entitlement to a homeowner relief property tax exemption;
• is in addition to the senior citizens and people with disabilities property tax exemptions;
• provides an appeal process for claimants who are denied an exemption; and
• provides a mechanism to recover  taxes exempted in error by a claimant, including interest but not penalties.

The proposal requires an amendment to the state constitution and voter approval of the amendment in November 2024.

This proposal creates a homeowner relief property tax exemption administration account. Funding for the account is through appropriation from the Legislature and is distributed to counties to assist in the cost of administering the exemption. The funds paid to counties will be $10.00 for the estimated initial year exemptions, and $5.00 for each application in subsequent years.

The bill applies to state property taxes levied for collection in 2027 and thereafter.

The new tax preference performance provisions do not apply to this bill.