Current through Register Vol. 24-06, March 15, 2024
(1)
Introduction. If land classified under
chapter
84.34 RCW is sold or
transferred and the new owner wants to retain the classified status of the
land, certain procedures must be followed before the conveyance may be recorded
or filed. This rule explains the necessary procedures and required
forms.
(2)
General
requirements - New owner elects to have the land remain classified. The
county recording authority may not accept an instrument conveying ownership of
land classified under
chapter
84.34 RCW unless certain
conditions are satisfied. When land classified under
chapter
84.34 RCW is sold or
transferred and the new owner elects to have the land retain its classified
status, prior to recording or filing the conveyance, the new owner or the new
owner's agent must:
(a) Sign the notice of
continuance that is part of the real estate excise tax (REET) affidavit or sign
a separate notice of continuance and attach it to the REET affidavit.
(Subsection (9) of this rule contains an explanation about REET.) Both the REET
affidavit and the notice of continuance are forms provided by the department of
revenue and supplied to the counties.
A copy of the REET affidavit may be obtained from the county
treasurer. If the classified land is owned by multiple owners, all owners or
their agent(s) must sign the notice of continuance that is part of the REET
affidavit or the separate notice of continuance attached to the REET
affidavit.
Except, a notice of continuance is not required when the
transfer of classified land is to a new owner who is an heir or devisee of a
deceased owner or is a transfer by a transfer on death deed; however, the land
must continue to meet the requirements of classification to avoid removal. The
treasurer determines that a transfer is by inheritance because the claim for
the inheritance exemption is filled out on the REET affidavit with supporting
documentation. The treasurer should notify the assessor when classified land
has been transferred by inheritance or by a transfer on death deed without a
notice of continuance; and
(b) Provide the assessor with a signed
statement that explains how the new owner intends to use the classified land
and any other information the assessor deems necessary to determine whether the
land will continue to be eligible for classification under
chapter
84.34 RCW.
RCW
84.34.121 and WAC
458-30-270.
(3)
Required duties of the assessor
before a conveyance of classified land may be filed or recorded. The new
owner must supply the assessor with the information outlined in subsection (2)
of this rule if the new owner elects to have the land remain classified under
chapter
84.34 RCW.
(a) After receiving all required
documentation, the assessor is allowed up to fifteen calendar days to determine
whether the land should retain its classified status or whether the land should
be removed from classification as of the date of conveyance.
(b) To make this determination, the assessor
may, but is not required to, consult with the county legislative authority if
the land is classified as either open space or timber land or a combination of
the county and city legislative authorities if the classified open space land
or timber land is within an incorporated part of the county. Both the assessor
and the granting authority may require the new owner to submit additional
information about the use of the classified land after the sale or transfer is
complete. This information will be used to determine whether the land should
remain classified under
chapter
84.34 RCW.
(4)When may a county
recording authority accept an instrument conveying ownership of classified
land? A county recording authority may not accept an instrument of
conveyance regarding the sale or transfer of land classified under
chapter
84.34 RCW for filing or
recording until the new owner complies with subsection (2) of this rule and the
assessor determines that the land will or will not continue to qualify for
classification.
(a) If the new owner signs
the notice of continuance and the assessor agrees that the land should remain
classified, the assessor checks the box on the REET affidavit that the land
qualifies for continued classified status. The completed affidavit is then
presented to the county recording authority so that it may record or file the
conveyance. A completed REET affidavit includes a stamp, placed on it by the
treasurer, indicating that any REET or additional tax, interest, and penalty
owed as a result of the sale or transfer has been paid. (See subsection (9) of
this rule for a more detailed explanation of the real estate excise
tax.)
(b) If the assessor decides
that the land must be removed or the owner submits a written request to remove
the land from classification, the assessor will check the appropriate box on
the REET affidavit that the land does not qualify for continuance, sign the
REET affidavit, and begin the removal procedures set forth in WAC
458-30-295. Unless the removal
results solely from one of the circumstances listed in
RCW
84.34.108(6), the additional
tax, interest, and penalty are due and payable by the seller or transferor at
the time of sale.
(5)
Land removed from classification with no back taxes imposed. If
the removal results solely from one of the circumstances or actions listed in
RCW
84.34.108(6), no additional
tax, interest, or penalty is imposed. The assessor will:
(a) Follow the procedures set forth in WAC
458-30-295 and
458-30-300 for removing land from
classification;
(b) Notify the
treasurer and the seller or transferor that no additional tax, interest, or
penalty will be imposed; and
(c) If
the land is acquired for conservation purposes by any of the entities listed in
RCW
84.34.108(6)(f), inform the
new owner that a lien equal to the amount of additional tax, interest, and
penalty has been placed on the land, even though the additional tax, interest,
and penalty will not be collected at this time. This lien becomes due and
payable if and when the land ceases to be used for one of the purposes outlined
in RCW
64.04.130 or
84.34.210.
(6)Sales or transfers of timber
land. When a parcel(s) of classified timber land is sold or transferred,
the new owner must submit a timber management plan to the assessor and comply
with the general requirements listed in subsection (2) of this rule to retain
the land's classified status. The assessor sends a copy of the timber
management plan to the granting authority of the county in which the classified
land is located. WAC
458-30-232 contains a list of the
types of additional information an assessor may require the new owner to submit
to enable the assessor to determine whether the land will be used to grow and
harvest timber for commercial purposes. Generally, the new owner is required to
submit a timber management plan when a sale or transfer of timber land occurs
and a notice of continuance is signed. However, because a notice of continuance
is not required when classified land is transferred by a transfer on death deed
or transferred to a new owner who is the heir or devisee of a deceased owner, a
timber management plan would not be required under these circumstances.
The assessor may allow an extension of time for submitting the
timber management plan when a notice of continuance is received. The new owner
will be notified of this extension in writing. If the timber management plan is
not received by the date set by the assessor, the notice of continuance will be
automatically denied.
(7)
Sales or transfers of farm and agricultural land. When a parcel(s)
of classified farm and agricultural land is sold or transferred, the new owner
must comply with the general requirements listed in subsection (2) of this
rule. The size of the classified land determines whether any additional
requirements must also be satisfied. After all required information is
submitted, the assessor determines whether the land qualifies for continued
classification.
(a) If the classified land
sold or transferred is twenty acres or more, the new owner must satisfy the
general requirements listed in subsection (2) of this rule.
(b) If the sale or transfer involves less
than twenty acres, the new owner will be required to comply with the general
requirements of subsection (2) of this rule and the seller or buyer may be
asked to provide gross income or investment information relating to the
productivity of the classified land. This income and investment information is
used to determine whether the land meets the requirements listed in
RCW
84.34.020(2)(b) , (c) , and
(d). However, if the income or investment
information is unavailable but the new owner is willing to sign the notice of
continuance and accept the responsibility for any additional tax , interest,
and penalty owed for prior years that will be due if the land is later found to
be ineligible for continued classification, the classified status of the land
will continue until the assessor determines that the land is no longer
eligible.
(i)RCW 84.34.020(2)(b)
and (c) set forth the minimum gross income
requirements for classified farm and agricultural land of less than twenty
acres. If classified land is transferred to a surviving spouse or state
registered domestic partner, the gross income requirements will not be examined
at the time of transfer, and the land will be subject to the same gross income
requirements that were applicable before the death of the spouse or domestic
partner. For example, a sixteen acre parcel of classified farm and agricultural
land classified in 1988, is transferred to a surviving spouse in 2005. The
classified land is still required to produce a minimum of one hundred dollars
per acre per year and the assessor is not required to review the income
information at the time of sale or transfer.
(ii) Sale or transfer of land classified
prior to January 1, 1993. As of January 1, 1993, the legislature imposed higher
gross income requirements on classified farm and agricultural land of less than
twenty acres. When land classified prior to January 1, 1993, is sold or
transferred to a new owner, excluding a transfer to a surviving spouse or state
registered domestic partner, the higher minimum income requirements set forth
in RCW
84.34.020(2)(b) (i)(B) and
(c)(ii) will be deferred for a period of
three years. The new owner is required to produce either two hundred dollars
per acre per year if the parcel is five acres or more but less than twenty
acres, or fifteen hundred dollars per year if the parcel is less than five
acres, at least once during the three calendar years immediately following the
sale or transfer. For example, if classification was granted in 1991 to a
fifteen acre parcel that produced a gross income of one hundred dollars per
acre per year until it was sold on April 15, 2009, the higher minimum gross
income requirements will be deferred until 2012. By the end of 2012, the new
owner must show that the parcel produced at least two hundred dollars per acre
for at least one year during the three-year period of 2010 through 2012. If the
land produced a gross income of two hundred dollars per acre, the land remains
classified as farm and agricultural land. If the land failed to produce this
amount at least once during this three-year period, the land will be removed
from classification and the owner will be required to pay additional tax,
interest, and penalty.
(iii) Sale
or transfer of land classified on or after January 1, 1993. The higher minimum
gross income requirements of
RCW
84.34.020(2)(b) (i)(B) and
(c)(ii) apply to land classified on or after
January 1, 1993. When the land is sold or transferred, the assessor may ask the
seller or buyer to provide gross income information relating to the farm and
agricultural operation for three of the past five years. This information will
be used to determine whether the land should retain its status as classified
farm and agricultural land. For example, a ten acre parcel that was classified
as farm and agricultural land on May 1, 1995, is sold on February 23, 2001. The
assessor asks the seller of the classified land to provide information about
the gross income the land produced during the five calendar years preceding the
sale (i.e., 1996 through 2000). To retain the farm and agricultural
classification, the land must have produced a minimum gross income of two
hundred dollars per acre per year at least three of the five calendar years
preceding the date of sale. However, if the gross income information is
unavailable but the new owner is willing to sign the notice of continuance and
accept the responsibility for any additional tax , interest, and penalty owed
for prior years that will be due if the land is later found to be ineligible
for continued classification, the classified status of the land will continue
until the assessor determines that the land is no longer eligible.
(iv)RCW
84.34.020(2)(d) sets forth
the minimum investment requirement for classified farm and agricultural land,
at least five but less than twenty acres, that has a standing crop. If
classified farm and agricultural land meeting this description is sold or
transferred, the assessor may ask the buyer or seller to provide information
that demonstrates that an investment in the production of the standing crops
equivalent to one hundred dollars or more per acre in the current or previous
calendar year was made.
(c) Segregation of land. If the sale or
transfer of classified land involves a segregation, the owner of the newly
created parcel(s) and the owner of the parcel from which the land was
segregated must comply with the requirements for classification, including the
minimum gross income or investment requirements, to enable the assessor to
continue the classified status of the land.
(8)New owner's acknowledgment.
The new owner, by signing the notice of continuance, acknowledges that future
use of the land must conform to the provisions of
chapter
84.34 RCW.
(9)Real estate excise tax
(REET). An excise tax is generally imposed in accordance with
chapter
82.45 RCW whenever real
property is sold or transferred. The amount of this tax is based upon the
selling price of the real property. Real estate excise tax is due at the time
of sale. This tax is paid to and collected by the treasurer of the county in
which the real property is located. Refer to
RCW
82.45.010 for a listing of transactions that
are not considered a sale or transfer upon which REET is imposed.)
Statutory Authority: 2009 c 521. 10-07-133, §
458-30-275, filed 3/23/10, effective 4/23/10. Statutory Authority:
RCW
84.34.141,
84.34.020, and
84.34.030. 02-20-041, §
458-30-275, filed 9/24/02, effective 10/25/02. Statutory Authority:
RCW
84.34.141. 01-24-030, § 458-30-275,
filed 11/27/01, effective 12/28/01. Statutory Authority: RCW 84.08.110,
84.08.070,
84.34.141 and
84.34.360. 95-21-002, §
458-30-275, filed 10/4/95, effective 11/4/95. Statutory Authority:
RCW
84.08.010 and
84.08.070. 90-24-087, §
458-30-275, filed 12/5/90, effective 1/5/91. Statutory Authority:
RCW
84.08.010(2),
84.34.141 and
chapter
84.34 RCW. 88-23-062
(Order PT 88-12), § 458-30-275, filed
11/15/88.