S-3879.1
SENATE BILL 6191
State of Washington 68th Legislature 2024 Regular Session
By Senators Frame, Nguyen, Saldaña, Dhingra, Keiser, Wellman, Hunt,
Hasegawa, Trudeau, Lovelett, C. Wilson, Stanford, Kuderer, Conway,
Cleveland, Pedersen, Valdez, and Nobles
Read first time 01/11/24. Referred to Committee on Ways & Means.
1 AN ACT Relating to increasing the supply of affordable and
2 workforce housing by reducing taxes on real property sales under
3 $3,025,000, modifying the state and local real estate excise tax, and
4 imposing a surcharge on the transfer of multimillion dollar
5 properties; amending RCW 82.45.060, 82.45.010, and 82.45.010; adding
6 new sections to chapter 82.45 RCW; creating new sections; providing
7 effective dates; and providing an expiration date.
8 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:
9 NEW SECTION. Sec. 1. The legislature finds that the lack of
10 housing affordability and related instances of homelessness are
11 issues that affect every community in Washington. The legislature
12 also finds that increased homelessness is overwhelmingly caused by
13 rising rents, which push people living at the margins into
14 homelessness, erode public confidence, and undermine the shared
15 values that have driven our state's prosperity. The legislature
16 further finds that problems caused by rent increases are exacerbated
17 by the associated issue of very low vacancy rates, which make it
18 difficult for people to find a unit even when they have sufficient
19 income or rental assistance to pay market rates. The legislature
20 finds that low housing vacancy rates, the growth in population, and
21 limited housing supply have created a housing shortage in which
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 1 existing inventory is priced at a premium. The legislature also finds
2 that although household incomes have grown along with the economy,
3 income increase for those with moderate and lower incomes have not
4 kept pace with rent and purchase price increases. This problem is
5 especially impacting lower and fixed income households, including
6 seniors, veterans, farmworkers, and people with disabilities. Indeed,
7 these trends, in combination with other market factors, have created
8 a deficit of housing that is affordable and available, particularly
9 for Washingtonians within the low to middle income range who are
10 increasingly more vulnerable to homelessness. Moreover, the
11 legislature finds that these households have the fewest options
12 available in the private housing market. In strong housing markets,
13 builders seek the highest achievable price to offset higher
14 development costs, which means new production does not create more
15 housing that is affordable.
16 The legislature further finds that having a home is a basic need
17 and fundamental for Washington residents, and that all Washingtonians
18 should be able to afford safe and dependable housing with access to
19 opportunities such as education, employment, transit, and amenities.
20 The legislature finds that housing that is affordable is an essential
21 part of every community's infrastructure, serving as a platform for
22 individuals and families to stabilize, build their economic futures,
23 and thrive. Housing serves as a platform for better health and
24 creates jobs and attracts investment, making it a prerequisite to
25 economic growth and stronger communities. In addition, the
26 legislature finds that a variety of housing types is needed to
27 provide affordable options for families of all sizes and stages of
28 life. Furthermore, the legislature finds that increasing the supply
29 of permanently affordable housing, getting residents back into
30 housing, and reducing homelessness is a priority of the people of
31 Washington state and that reducing homelessness lessens fiscal impact
32 to the state and improves the economic vitality of our businesses.
33 Moreover, the legislature finds that the private real estate
34 market does not provide adequate housing options affordable for all
35 economic segments, and therefore government assistance is needed to
36 offer the full range of affordable housing options.
37 The legislature further finds that Washington has the most
38 regressive tax code in the nation, with low-income families paying
39 six times more in taxes, as a share of their income, than the
40 wealthiest individuals in the state. This means lower-income and
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 1 middle-income families shoulder an inequitable amount of the
2 responsibility of funding critical community investments and
3 resources.
4 Therefore, it is the intent of the legislature to increase the
5 supply of housing that is affordable through a permanent, dedicated
6 investment in the Washington housing trust fund, and related housing
7 programs, for Washington residents in the low-income to middle-income
8 range while reducing their tax burden and ensuring Washington's most
9 wealthy share more equitably in the responsibility of funding the
10 essential need of affordable housing in our communities.
11 Sec. 2. RCW 82.45.060 and 2019 c 424 s 1 are each amended to
12 read as follows:
13 (1) There is imposed an excise tax upon each sale of real
14 property.
15 (a) Through December 31, 2019, the rate of the tax imposed under
16 this section is 1.28 percent of the selling price.
17 (b) Beginning January 1, 2020, through December 31, 2024, and
18 except as provided in (c) of this subsection, the rate of the tax
19 imposed under this section is as follows:
20 (i) 1.1 percent of the portion of the selling price that is less
21 than or equal to ((five hundred thousand dollars)) $500,000;
22 (ii) 1.28 percent of the portion of the selling price that is
23 greater than ((five hundred thousand dollars)) $500,000 and equal to
24 or less than ((one million five hundred thousand dollars))
25 $1,500,000;
26 (iii) 2.75 percent of the portion of the selling price that is
27 greater than ((one million five hundred thousand dollars)) $1,500,000
28 and equal to or less than ((three million dollars)) $3,000,000; and
29 (iv) Three percent of the portion of the selling price that is
30 greater than ((three million dollars)) $3,000,000.
31 (c) The sale of real property that is classified as timberland or
32 agricultural land is subject to the tax imposed under this section at
33 a rate of 1.28 percent of the selling price.
34 (d) Beginning January 1, 2025, and except as provided in (c) of
35 this subsection, the rate of the tax imposed under this section is as
36 follows:
37 (i) 1.1 percent of the portion of the selling price that is less
38 than or equal to $750,000;
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 1 (ii) 1.28 percent of the portion of the selling price that is
2 greater than $750,000 and equal to or less than $1,525,000;
3 (iii) 2.75 percent of the portion of the selling price that is
4 greater than $1,525,000 and equal to or less than $3,025,000; and
5 (iv) 3.0 percent of the portion of the selling price that is
6 greater than $3,025,000.
7 (2) Beginning July 1, 2022, and every fourth year thereafter:
8 (a) The department must adjust the applicable selling price
9 threshold in subsection (1)(b)(i) or (d)(i) of this section to
10 reflect the lesser of the growth of the consumer price index for
11 shelter or five percent. If the growth is equal to or less than zero
12 percent, the current selling price threshold continues to apply.
13 (b) The department must adjust the applicable selling price
14 thresholds in subsection (1)(b)(ii) through (iv) or (d)(ii) through
15 (iv) of this section by the dollar amount of any increase in the
16 applicable selling price threshold in subsection (1)(b)(i) or (d)(i)
17 of this section.
18 (c) The department must publish updated selling price thresholds
19 by September 1, 2022, and September 1st of every fourth year
20 thereafter. Updated selling price thresholds ((will)) apply beginning
21 January 1, 2023, and January 1st every fourth year thereafter.
22 Adjusted selling price thresholds must be rounded to the nearest
23 ((one thousand dollars)) $1,000. No changes may be made to adjusted
24 selling price thresholds once such adjustments take effect.
25 (d) The most recent selling price threshold becomes the base for
26 subsequent adjustments.
27 (e) The department must report adjustments to the selling price
28 thresholds to the fiscal committees of the legislature, beginning
29 December 1, 2022, and December 1st every fourth year thereafter.
30 (3)(a) The department must publish guidance to assist sellers in
31 properly classifying real property on the real estate excise tax
32 affidavit for purposes of determining the proper amount of tax due
33 under this section. Real property with multiple uses must be
34 classified according to the property's predominant use. The
35 department's guidance must include factors for use in determining the
36 predominant use of real property.
37 (b) County treasurers are not responsible for verifying that the
38 seller has properly classified real property reported on a real
39 estate excise tax affidavit. The department is solely responsible for
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 1 such verification as part of its audit responsibilities under RCW
2 82.45.150.
3 (4)(a) Beginning July 1, 2013, and ending December 31, 2019, an
4 amount equal to two percent of the proceeds of this tax must be
5 deposited in the public works assistance account created in RCW
6 43.155.050, an amount equal to ((four and one-tenth)) 4.1 percent
7 must be deposited in the education legacy trust account created in
8 RCW 83.100.230, an amount equal to ((one and six-tenths)) 1.6 percent
9 must be deposited in the city-county assistance account created in
10 RCW 43.08.290, and the remainder must be deposited in the general
11 fund.
12 (b) Beginning January 1, 2020, amounts collected from the tax
13 imposed under this section must be deposited as provided in RCW
14 82.45.230.
15 (5) The definitions in this subsection apply throughout this
16 section unless the context clearly requires otherwise.
17 (a) "Agricultural land" means farm and agricultural land and farm
18 and agricultural conservation land, as those terms are defined in RCW
19 84.34.020, including any structures on such land.
20 (b) "Consumer price index for shelter" means the most current
21 seasonally adjusted index for the shelter expenditure category of the
22 consumer price index for all urban consumers (CPI-U) as published by
23 July 31st by the bureau of labor statistics of the United States
24 department of labor.
25 (c) "Growth of the consumer price index for shelter" means the
26 percentage increase in the consumer price index for shelter as
27 measured from data published by the bureau of labor statistics of the
28 United States department of labor by July 31st for the most recent
29 three-year period for the selling price threshold adjustment in 2022,
30 and the most recent four-year period for subsequent selling price
31 threshold adjustments.
32 (d) "Timberland" means land classified under chapter 84.34 RCW or
33 designated under chapter 84.33 RCW, including any structures and
34 standing timber on such land, and standing timber sold apart from the
35 land upon which it sits.
36 NEW SECTION. Sec. 3. A new section is added to chapter 82.45
37 RCW to read as follows:
38 (1) Beginning January 1, 2025, and in addition to the tax imposed
39 in RCW 82.45.060, a real estate transfer tax is imposed on the sale
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 1 of qualified real property. This tax must be paid by the seller and
2 imposed and collected in the same manner as the real estate excise
3 tax imposed under this chapter.
4 (a) For purposes of this section, "qualified real property" means
5 the sale of real property in which the seller is required to pay real
6 estate excise tax under RCW 82.45.060(1)(d)(iv).
7 (b) The real estate transfer tax must be one percent of the
8 selling price greater than the amount listed in RCW
9 82.45.060(1)(d)(iv).
10 (2) The selling price threshold in subsection (1) of this section
11 must be adjusted by the department in accordance with RCW
12 82.45.060(2).
13 (3) The amounts collected from the real estate transfer tax
14 imposed pursuant to this section must be distributed as follows:
15 (a) 93 percent must be deposited pursuant to the distributions in
16 RCW 82.45.230(2); and
17 (b) The remaining amounts collected must be deposited as follows:
18 (i) 25 percent must be deposited into the Washington housing
19 trust fund created in RCW 43.185A.130 and five percent must be used
20 solely for housing facilities in rural communities that prioritize
21 serving low-income farmworker households;
22 (ii) 25 percent must be deposited into the apple health and homes
23 account created in RCW 43.330.184;
24 (iii) 25 percent must be deposited into the affordable housing
25 for all account created in RCW 43.185C.190 for operations,
26 maintenance, and service costs for permanent supportive housing as
27 defined in RCW 36.70A.030;
28 (iv) 15 percent must be deposited into the developmental
29 disabilities housing and services account created in section 4 of
30 this act; and
31 (v) 10 percent must be deposited into the housing stability
32 account created in section 5 of this act.
33 NEW SECTION. Sec. 4. A new section is added to chapter 82.45
34 RCW to read as follows:
35 (1) The developmental disabilities housing and services account
36 is created in the state treasury. Receipts from the real estate
37 transfer tax directed to this account pursuant to section 3 of this
38 act must be deposited into the account. Moneys in the account may
39 only be spent after appropriation.
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 1 (2) Expenditures from the account may be used only for:
2 (a)(i) Housing to support people with developmental disabilities,
3 including acquisition, development, or construction of permanent
4 housing, housing developments, or units, including new units in
5 existing structures;
6 (ii) Up to 15 percent of the total cost of a housing project that
7 qualifies under (a) of this subsection may include acquisition,
8 development, or construction of nonresident spaces that are integral
9 to the overall design and support successful community living;
10 (b) Preservation, operations, and maintenance costs of housing
11 for people with developmental disabilities;
12 (c) Housing-related services for individuals with developmental
13 disabilities;
14 (d) Rental subsidies; and
15 (e) Technical assistance to support nonprofit organizations in
16 applying for this funding through the account in order to expand the
17 pool of eligible developers for construction and long-term
18 sustainable maintenance for housing that meets the needs of people
19 with developmental disabilities.
20 (3) Expenditures from the account must be grants or forgivable
21 loans. For applications under this section, the department of
22 commerce must use an application form and evaluation criteria
23 separate from the application form and criteria for the Washington
24 housing trust fund created in RCW 43.185A.130. The department of
25 commerce must coordinate with the department of social and health
26 services regarding any needed supportive services and make efforts to
27 enact the recommendations of the housing needs study for individuals
28 with intellectual and developmental disabilities, as provided in
29 section 1068(6), chapter 332, Laws of 2021.
30 (4) For the purposes of this section, the following definitions
31 apply unless the context clearly requires otherwise.
32 (a) "Forgivable loans" means a noninterest-bearing financial
33 award that is forgiven in its entirety provided the borrower project
34 continues to serve the original target group as described in
35 subsection (2)(a) of this section for a period of at least 25 years.
36 (b) "Grants" means a financial award that does not require
37 payback, provided the grantee project continues to serve the original
38 target group as described in subsection (2)(a) of this section for a
39 period of at least 25 years.
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 1 (c) "Housing-related services" means services that are provided
2 to eligible households as described in subsection (2)(c) of this
3 section, which have the purpose of helping the household gain,
4 maintain, or increase housing stability. Housing-related services may
5 include, but are not limited to: Case management; tenant education
6 and supports; financial assistance for essential costs of housing;
7 services to identify, locate, and secure housing; landlord
8 mitigation; landlord or tenant dispute mediation; services to prevent
9 eviction or loss of housing; assistance securing financial housing
10 assistance, such as a voucher or subsidy; or assistance with tenant
11 applications.
12 (d) "Nonresidential spaces" means any space used to provide a
13 service that benefi