Bill Summary – FastDemocracy

H-2808.3
                           SUBSTITUTE HOUSE BILL 2026
     State of Washington         68th Legislature       2024 Regular Session
     By House Finance (originally sponsored     by   Representatives   Doglio,
     Bateman, Ryu, Ramel, Reed, and Kloba)
     READ FIRST TIME 01/25/24.
     AN ACT Relating to rental income received by people eligible for
 certain property tax exemption programs; amending RCW 84.36.383; and
 creating new sections.
 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:
     Sec. 1.    RCW 84.36.383 and 2023 c 147 s 2 are each amended to
 read as follows:
     As used in RCW 84.36.381 through 84.36.389, unless the context
 clearly requires otherwise:
     (1) "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 or received by the person claiming the exemption or his
 or her spouse or domestic partner 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;
     (b) The treatment or care of either person received in the home
 or in a nursing home, assisted living facility, or adult family home;
     (c) Health care insurance premiums for medicare under Title XVIII
 of the social security act;
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     (d) Costs related to medicare supplemental policies as defined in
 Title 42 U.S.C. Sec. 1395ss;
     (e) Durable medical equipment, mobility enhancing equipment,
 medically prescribed oxygen, and prosthetic devices as defined in RCW
 82.08.0283;
     (f) Long-term care insurance as defined in RCW 48.84.020;
     (g) Cost-sharing amounts as defined in RCW 48.43.005;
     (h) Nebulizers as defined in RCW 82.08.803;
     (i)   Medicines  of   mineral,   animal,  and   botanical  origin
 prescribed, administered, dispensed, or used in the treatment of an
 individual by a person licensed under chapter 18.36A RCW;
     (j) Ostomic items as defined in RCW 82.08.804;
     (k) Insulin for human use;
     (l) Kidney dialysis devices; ((and))
     (m) Disposable devices used to deliver drugs for human use as
 defined in RCW 82.08.935; and
     (n) Rental amounts up to $6,000 per year received from the
 renting of living space in the person's principal place of residence.
     (i) For the purposes of this subsection (1)(n), "rental amount"
 has the same meaning as in RCW 59.18.030.
     (ii) For the purposes of this subsection (1)(n), amounts received
 from short-term rentals, as defined in RCW 64.37.010, are not
 included. Any amounts received from a short-term rental must be
 reported as income.
     (2) "Cotenant" means a person who resides with the person
 claiming the exemption and who has an ownership interest in the
 residence.
     (3) "County median household income" means the median household
 income estimates for the state of Washington by county of the legal
 address of the principal place of residence, as published by the
 office of financial management.
     (4) "Department" means the state department of revenue.
     (5) "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.
     (6) "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
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 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:
     (i) Attendant-care payments;
     (ii) Medical-aid payments;
     (iii) Disability compensation, as defined in Title 38, part 3,
 section 3.4 of the Code of Federal Regulations, as of January 1,
 2008; and
     (iv) Dependency and indemnity compensation, as defined in Title
 38, part 3, section 3.5 of the Code of Federal Regulations, as of
 January 1, 2008;
     (g) Federal social security act and railroad retirement benefits;
     (h) Dividend receipts; and
     (i) Interest received on state and municipal bonds.
     (7) "Income threshold 1" means:
     (a) For taxes levied for collection in calendar years prior to
 2020, a combined disposable income equal to $30,000;
     (b) For taxes levied for collection in calendar years 2020
 through 2023, a combined disposable income equal to the greater of
 "income threshold 1" for the previous year or 45 percent of the
 county median household income; and
     (c) For taxes levied for collection in calendar year 2024 and
 thereafter, a combined disposable income equal to the greater of
 "income threshold 1" for the previous year or 50 percent of the
 county median household income, adjusted every three years beginning
 August 1, 2023, as provided in RCW 84.36.385(8).
     (8) "Income threshold 2" means:
     (a) For taxes levied for collection in calendar years prior to
 2020, a combined disposable income equal to $35,000;
     (b) For taxes levied for collection in calendar years 2020
 through 2023, a combined disposable income equal to the greater of
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 "income threshold 2" for the previous year or 55 percent of the
 county median household income; and
     (c) For taxes levied for collection in calendar year 2024 and
 thereafter, a combined disposable income equal to the greater of
 "income threshold 2" for the previous year or 60 percent of the
 county median household income, adjusted every three years beginning
 August 1, 2023, as provided in RCW 84.36.385(8).
     (9) "Income threshold 3" means:
     (a) For taxes levied for collection in calendar years prior to
 2020, a combined disposable income equal to $40,000;
     (b) For taxes levied for collection in calendar years 2020
 through 2023, a combined disposable income equal to the greater of
 "income threshold 3" for the previous year or 65 percent of the
 county median household income; and
     (c) For taxes levied for collection in calendar year 2024 and
 thereafter, a combined disposable income equal to the greater of
 "income threshold 3" for the previous year or 70 percent of the
 county median household income, adjusted every three years beginning
 August 1, 2023, as provided in RCW 84.36.385(8).
     (10) "Principal place of residence" means a residence occupied
 for more than six months each calendar year by a person claiming an
 exemption under RCW 84.36.381.
     (11) 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.
     (12) 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
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  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.
      NEW SECTION.    Sec. 2.   This act applies to taxes levied for
  collection in 2027 and thereafter.
     NEW SECTION. Sec. 3. RCW 82.32.805 and 82.32.808 do not apply
 to this act. The legislature intends for this tax preference and its
 expansion to be permanent.
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Statutes affected: 
Original Bill: 84.36.383
Substitute Bill: 84.36.383