Current through Register Vol. 23-24, December 15, 2023
(1)
(a)
Introduction. This rule
explains the real and personal property tax exemption that may be claimed by
nonprofit entities providing rental housing or lots for mobile homes within a
mobile home park, mobile home park cooperative, or manufactured housing
cooperative for occupancy by qualifying households in accordance with
RCW
84.36.560.
(b)
Examples. This rule includes
examples that identify a number of facts and then state a conclusion. These
examples should only be used as a general guide. The tax results of other
situations must be determined after a review of all the facts and
circumstances.
(2)
Definitions. For the purposes of this rule, the following
definitions apply:
(a) "Group home" means a
single-family dwelling financed, in whole or in part, by one or more of the
sources listed in subsection (4)(d) of this rule. A "group home" has multiple
units occupied on a twenty-four-hour basis by persons who are not related by
birth or marriage and who are not dependent upon each other financially.
Residents of a "group home" typically receive financial assistance from the
federal or state government, such as Social Security benefits or supplementary
security insurance.
(b) "Mobile
home lot" or "mobile home park" means the same as these terms are defined in
RCW
59.20.030.
(c) "Nonprofit entity" means a:
(i) Nonprofit as defined in
RCW
84.36.800 that is exempt from income tax
under section 501(c) of the federal Internal Revenue Code, as
amended;
(ii) Limited partnership
in which a general partner is a nonprofit as defined in
RCW
84.36.800 that is exempt from income tax
under section 501(c) of the federal Internal Revenue Code, as amended, a public
corporation established under
RCW
35.21.660,
35.21.670,
or
35.21.730,
a housing authority created under
RCW
35.82.030 or
35.82.300,
or a housing authority meeting the definition in
RCW
35.82.210(2)(a);
(iii) Limited liability company in which a
managing member is a nonprofit as defined in
RCW
84.36.800 that is exempt from income tax
under section 501(c) of the federal Internal Revenue Code, as amended, a public
corporation established under
RCW
35.21.660,
35.21.670,
or
35.21.730,
a housing authority established under
RCW
35.82.030 or
35.82.300,
or a housing authority meeting the definition in
RCW
35.82.210(2)(a);
or
(iv) Mobile home park
cooperative or a manufactured housing cooperative, as defined in
RCW
59.20.030. A "mobile home park cooperative"
and a "manufactured housing cooperative" are defined as real property
consisting of common areas and two or more lots held out for placement of
mobile homes, manufactured homes, or park models in which both the individual
lots and the common areas are owned by an association of shareholders which
leases or otherwise extends the right to occupy individual lots to its own
members.
(d) "Occupied
dwelling unit" means a living unit that is occupied by an individual or
household as of December 31st of the first assessment year the rental housing
or mobile home park becomes operational or is occupied by an individual or
household on January 1st of each subsequent assessment year in which the claim
for exemption is submitted.
(e)
"Qualifying household" means:
(i) Until June
30, 2021, a single person, family, or unrelated persons living together whose
income is at or below fifty percent of the median income adjusted for family
size as most recently determined by the federal Department of Housing and Urban
Development for the county in which the rental housing or mobile home park is
located. The median income level is that which is in effect as of January 1st
of the year the application for exemption is submitted.
(ii) Beginning July 1, 2021, a single person,
family, or unrelated persons living together whose income is at or below sixty
percent of the median income adjusted for family size as most recently
determined by the federal Department of Housing and Urban Development for the
county in which the rental housing or mobile home park is located. The median
income level is that which is in effect as of January 1st of the year the
application for exemption is submitted.
(f) "Rental housing" means a residential
housing facility or group home that is occupied, but not owned, by qualifying
households.
(3)
Initial application and renewal declaration.
(a) Initial application. An initial
application for exemption must be filed with the department on or before March
31st to exempt property from taxes due in the following year. However, an
initial application may be filed after March 31st if the property is acquired
or converted to an exempt use after that date, if the property may qualify for
an exemption under chapter 84.36 RCW.
(b) Renewal declaration. In order to
requalify for exempt status, a nonprofit entity receiving this exemption must
file a renewal declaration on or before March 31st of every third year
following initial qualification for exemption.
(c) Additional information about the
application and renewal requirements for this exemption can be found in WAC
458-16-110 Initial application
and renewal declaration.
(4)
Full exemption. Real and
personal property is exempt from property taxes if:
(a) The property is owned or used by a
nonprofit entity, as defined in subsection (2) of this rule, in providing
rental housing for qualifying households or used to provide a lot of land upon
which a mobile home for a qualifying household will be placed in a mobile home
park;
(b) The benefit of the
exemption is received by the nonprofit entity. That is, if the property is
leased to or used by, but not owned by, a nonprofit entity, the reduction in
property taxes due to the exemption is passed on to the nonprofit user either
through a reduction in rent, reimbursement of rent, or property tax
paid;
(c) At least seventy-five
percent of the occupied dwelling units in the rental housing or lots in the
mobile home park are occupied by qualifying households; and
(d) The rental housing or lots in the mobile
home park are insured, financed, or assisted, in whole or in part, through one
or more of the following sources:
(i) A
federal or state housing program administered by the department of
commerce;
(ii) A federal housing
program administered by a city or county government;
(iii) An affordable housing levy authorized
under
RCW
84.52.105;
(iv) The surcharges authorized by
RCW
36.22.178 and
36.22.179
and any of the surcharges authorized in chapter 43.185C RCW; or
(v) The Washington state housing finance
commission, provided that the financing is for a mobile home park cooperative
or a manufactured housing cooperative, as defined in
RCW
59.20.030, or a nonprofit entity.
(5)
Partial
exemption. If less than seventy-five percent of the occupied dwelling
units within the rental housing or lots in the mobile home park are occupied by
qualifying households, the rental housing or mobile home park is eligible for a
partial exemption on the real property and a total exemption on the housing's
or park's personal property. The property must be owned or used by a nonprofit
entity in providing rental housing for qualifying households or used to provide
a lot upon which a mobile home for a qualifying household will be placed in a
mobile home park.
(a) A partial exemption
will be allowed for each dwelling unit in the rental housing or for each lot in
the mobile home park occupied by a qualifying household; and
(b) The amount of the real property exemption
will be calculated by multiplying the assessed value of the property reasonably
necessary to provide the rental housing or to operate the mobile home park by a
fraction. The formula for determining the fraction is as follows:
(i) The numerator of the fraction is the
number of dwelling units or lots occupied by qualifying households as of
December 31st of the first assessment year in which the rental housing facility
or mobile home park becomes operational, or on January 1st of each subsequent
assessment year in which the claim for exemption is submitted; and
(ii) The denominator of the fraction is the
total number of dwelling units or lots occupied as of December 31st of the
first assessment year in which the rental housing facility or mobile home park
becomes operational, or on January 1st of each subsequent assessment year in
which the claim for exemption is submitted.
(6)
Exempt facility with three or fewer
units or a mobile home park with three or fewer lots with vacancy on January
1st. If the rental housing or mobile home park is comprised of three or
fewer dwelling units or lots and there are any unoccupied dwelling units or
lots on January 1st, the department will determine the size of the exemption
based on the number of occupied dwelling units or lots as of December 31st of
the first assessment year the rental housing becomes operational, and on May
1st of each subsequent assessment year in which a claim for exemption is
submitted. For example, if one-half of an exempt duplex is vacant on January
1st and it is the duplex's third year of operation, the department will
determine the size of the exemption based on the number of occupied units on
May 1st of that assessment year.
(7)
Allowance for income growth.
Because the occupants of rental housing and mobile home parks granted an
exemption under
RCW
84.36.560 are generally attempting to improve
their financial situation, the income of the household is likely to fluctuate
during the time they occupy the rental housing unit or lot in the mobile home
park.
(a) In an attempt to assist these
households in improving their circumstances, the exemption will continue for
specific rental housing units or mobile home lots if the rental housing or
mobile home park continues to meet the certification requirements in subsection
(4)(d) of this rule, and if the household's income rises above the applicable
"qualifying household" threshold in subsection (2)(e) of this rule, but remains
at or below eighty percent of the median income adjusted for family size as
most recently determined by the federal Department of Housing and Urban
Development for the county in which the rental housing or mobile home park is
located; and
(b) If a rental
housing unit or mobile home lot receiving an exemption under the exception in
(a) of this subsection becomes vacant and is subsequently rerented, the income
of the household moving into the rental unit or onto the mobile home lot must
meet the applicable median income requirements for a qualifying household as
described in subsection (2)(e) of this rule to remain exempt from property
tax.
(c) Example. If a rental unit
is occupied by a qualifying household whose income rises up to seventy percent
of median income, the unit will retain its exempt status as long as the
household continues to occupy the rental unit and the household's income
remains below eighty percent of median income. If the residents of the rental
unit move out on June 1st and the unit is subsequently rented to a qualifying
household whose income is at or below the median income threshold in subsection
(2)(e) of this rule, the unit will retain its exempt status. Conversely, if the
rental unit is rented to a household whose income is above the median income
threshold in subsection (2)(e) of this rule, the unit becomes ineligible for
exemption as of January 1st of the following year.
(8)
Group homes - Income of
residents. The income of the individual residents of a group home, as
defined in subsection (2) of this rule, will not be combined so as to
constitute the income of a single household. Each resident will be considered
an independent household occupying a separate dwelling unit. In other words,
the income of the residents of a group home will not be aggregated when the
department determines the size of the exemption the group home is entitled to
receive. For example, if there are six residents in a group home, the
department will process the application for exemption as if there were six
separate dwelling units and determine the size of the exemption on that basis.
If three of the residents have income at or below the median income threshold
in subsection (2)(e) of this rule, the group home will receive a fifty percent
reduction in the property taxes due on the group home.
(9)
Eligibility of property unoccupied
at the time of initial application or at any time after the exemption is
granted. Property that is unoccupied at the time of initial application
or on January 1st of any subsequent year is still eligible for exemption if
certain conditions are met. If the property is currently taxable, it may
receive exempt status as of the assessment year in which the claim for
exemption is submitted. If the property is currently exempt but the exempt use
will cease or will be reduced because of renovations or repairs, the exempt
status of the property may be continued for taxes payable the next year. The
following conditions must be satisfied to receive an exemption under either of
these circumstances:
(a) The rental housing
or mobile home park will be used for the exempt purpose stated in
RCW
84.36.560 within two assessment
years;
(b) The nonprofit entity
applying for or receiving the exemption has obtained a commitment for
financing, in whole or in part, to acquire, construct, remodel, renovate, or
otherwise convert the property to provide housing for qualifying households
from one or more of the sources listed in subsection (4)(d) of this
rule;
(c) The nonprofit entity has
manifested its intent in writing to construct, remodel, renovate, or otherwise
convert the rental housing or mobile home park to housing for qualifying
households; and
(d) If less than
the entire facility or mobile home park will be used to provide rental housing
or mobile home lots for qualifying households, only that portion is entitled to
an exemption under this rule.
(10)
Exclusive use required. To
be exempt under
RCW
84.36.560, the property must be exclusively
used to provide rental housing or mobile home lots for qualifying households,
except as provided in
RCW
84.36.805.
(11)
Payments in-lieu of property tax
will be accepted. Any nonprofit entity that qualifies for a property tax
exemption under
RCW
84.36.560 may agree to make payments to the
city, county, or other political subdivision for the improvements, services,
and facilities furnished by the city, county, or political subdivision for the
benefit of the exempt rental housing facility or mobile home lots. However,
these payments may not exceed the amount of property tax last levied as the
annual tax by the city, county, or political subdivision on the property prior
to the time the exemption was effective.
Amended by
WSR
20-03-105, Filed 1/15/2020, effective
2/15/2020
Amended by
WSR
21-01-063, Filed 12/9/2020, effective
1/9/2021
Statutory Authority:
RCW
84.36.865 and
84.36.560. 09-04-036, §
458-16-560, filed 1/29/09, effective 3/1/09; 02-15-020, § 458-16-560,
filed 7/8/02, effective 8/8/02.