wa-law.org > bill > 2025-26 > HB 2027 > Original Bill
The legislature finds that the lack of housing affordability and related instances of homelessness are issues that affect every community in Washington. The legislature also finds that increased homelessness is overwhelmingly caused by rising rents, which push people living at the margins into homelessness, erode public confidence, and undermine the shared values that have driven our state's prosperity. The legislature further finds that problems caused by rent increases are exacerbated by the associated issue of very low vacancy rates, which make it difficult for people to find a unit even when they have sufficient income or rental assistance to pay market rates. The legislature finds that low housing vacancy rates, the growth in population, and a limited housing supply have created a housing shortage in which existing inventory is priced at a premium. The legislature also finds that although household incomes have grown along with the economy, increases in income for those with moderate and lower incomes have not kept pace with rent and purchase price increases. This problem is especially impacting lower and fixed income households, including people with disabilities, seniors, veterans, and farmworkers.
Indeed, these trends, in combination with other market factors, have created a deficit of housing that is affordable and available, particularly for Washingtonians within the low to middle income range who are increasingly more vulnerable to homelessness. Moreover, the legislature finds that these households have the fewest options available in the private housing market to find and retain a unit. In strong housing markets, builders seek the highest achievable price to offset higher development costs, which means new production does not create more housing that is affordable.
The legislature finds that to meet the housing needs of all Washingtonians over the next 20 years, we need to build more than 500,000 new homes affordable to very and extremely low-income people, those making less than 50 percent of area median income. Furthermore, the legislature finds that having a home is a basic need and fundamental for Washington residents, and that all Washingtonians should be able to afford safe and dependable housing with access to opportunities such as education, employment, transit, and amenities.
The legislature finds that housing that is affordable is an essential part of every community's infrastructure, serving as a platform for individuals and families to stabilize, build their economic futures, and thrive. Housing serves as a platform for better health and creates jobs and attracts investment, making it a prerequisite to economic growth and stronger communities. In addition, the legislature finds that a variety of housing types is needed to provide affordable options for families of all sizes and stages of life. Furthermore, the legislature finds that increasing the supply of permanently affordable housing, getting residents back into housing, and reducing homelessness is a priority of the people of Washington state, and that reducing homelessness lessens the fiscal impact to the state and improves the economic vitality of our businesses.
Moreover, the legislature finds that the private real estate market does not provide adequate housing options affordable for all economic segments, and thus government assistance is needed to offer the full range of affordable housing options.
Therefore, it is the intent of the legislature to increase the supply of housing that is affordable and to stabilize and get people back into housing through permanent, dedicated investment in state housing programs for Washington residents in the low to middle income range.
There is imposed an excise tax upon each sale of real property.
Through December 31, 2019, the rate of the tax imposed under this section is 1.28 percent of the selling price.
Beginning January 1, 2020, except as provided in (c) of this subsection, the rate of the tax imposed under this section is as follows:
1.1 percent of the portion of the selling price that is less than or equal to $500,000;
1.28 percent of the portion of the selling price that is greater than $500,000 and equal to or less than $1,500,000;
2.75 percent of the portion of the selling price that is greater than $1,500,000 and equal to or less than $3,000,000; and
Three percent of the portion of the selling price that is greater than $3,000,000.
The sale of real property that is classified as timberland or agricultural land is subject to the tax imposed under this section at a rate of 1.28 percent of the selling price.
Beginning July 1, 2022, and every fourth year thereafter:
The department must adjust the applicable selling price threshold in subsection (1)(b)(i) of this section to reflect the lesser of the growth of the consumer price index for shelter or five percent. If the growth is equal to or less than zero percent, the current selling price threshold continues to apply.
The department must adjust the applicable selling price thresholds in subsection (1)(b)(ii) through (iv) of this section and section 3(1) of this act by the dollar amount of any increase in the applicable selling price threshold in subsection (1)(b)(i) of this section.
The department must publish updated selling price thresholds by September 1, 2022, and September 1st of every fourth year thereafter. Updated selling price thresholds apply beginning January 1, 2023, and January 1st every fourth year thereafter. Adjusted selling price thresholds must be rounded to the nearest $1,000. No changes may be made to adjusted selling price thresholds once such adjustments take effect.
The most recent selling price threshold becomes the base for subsequent adjustments.
The department must report adjustments to the selling price thresholds to the fiscal committees of the legislature, beginning December 1, 2022, and December 1st every fourth year thereafter.
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The department must publish guidance to assist sellers in properly classifying real property on the real estate excise tax affidavit for purposes of determining the proper amount of tax due under this section. Real property with multiple uses must be classified according to the property's predominant use. The department's guidance must include factors for use in determining the predominant use of real property.
County treasurers are not responsible for verifying that the seller has properly classified real property reported on a real estate excise tax affidavit. The department is solely responsible for such verification as part of its audit responsibilities under RCW 82.45.150.
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Beginning July 1, 2013, and ending December 31, 2019, an amount equal to two percent of the proceeds of this tax must be deposited in the public works assistance account created in RCW 43.155.050, an amount equal to 4.1 percent must be deposited in the education legacy trust account created in RCW 83.100.230, an amount equal to 1.6 percent must be deposited in the city-county assistance account created in RCW 43.08.290, and the remainder must be deposited in the general fund.
Beginning January 1, 2020, amounts collected from the tax imposed under this section must be deposited as provided in RCW 82.45.230.
The definitions in this subsection apply throughout this section unless the context clearly requires otherwise.
"Agricultural land" means farm and agricultural land and farm and agricultural conservation land, as those terms are defined in RCW 84.34.020, including any structures on such land.
"Consumer price index for shelter" means the most current seasonally adjusted index for the shelter expenditure category of the consumer price index for all urban consumers (CPI-U) as published by July 31st by the bureau of labor statistics of the United States department of labor.
"Growth of the consumer price index for shelter" means the percentage increase in the consumer price index for shelter as measured from data published by the bureau of labor statistics of the United States department of labor by July 31st for the most recent three-year period for the selling price threshold adjustment in 2022, and the most recent four-year period for subsequent selling price threshold adjustments.
"Timberland" means land classified under chapter 84.34 RCW or designated under chapter 84.33 RCW, including any structures and standing timber on such land, and standing timber sold apart from the land upon which it sits.
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Beginning January 1, 2027, and in addition to the tax imposed in RCW 82.45.060, a real estate transfer tax is imposed on the sale of real property in which the seller is required to pay real estate excise tax under RCW 82.45.060(1)(b)(iv) for the sale of residential property. This tax must be paid by the seller and imposed and collected in the same manner as the real estate excise tax imposed under this chapter.
The real estate transfer tax is imposed on the sale of residential property as follows:
One percent of the portion of the selling price that is equal to or greater than $3,051,000, but less than $5,026,000;
Two percent of the portion of the selling price that is equal to or greater than $5,026,000, but less than $10,026,000; and
Three percent of the portion of the selling price that is equal to or greater than $10,026,000.
The selling price threshold in subsection (1) of this section must be adjusted by the department in accordance with RCW 82.45.060(2).
The amounts collected from the tax imposed under this section must be deposited as follows:
40 percent must be deposited into the developmental disabilities housing and services account created in section 4 of this act;
40 percent must be deposited into the affordable housing for all account created in RCW 43.185C.190 for operations, maintenance, and service costs for permanent supportive housing as defined in RCW 36.70A.030;
10 percent must be deposited into the housing stability account created in section 5 of this act; and
10 percent must be deposited into the Washington housing trust fund created in RCW 43.185A.130 solely for farmworker housing.
For the purposes of this section, "residential property" means a single-family dwelling unit whether such unit be separate or part of a multiunit dwelling.
The developmental disabilities housing and services account is created in the state treasury. Receipts from the real estate transfer tax directed to this account pursuant to RCW 82.45.230 must be deposited into the account. Moneys in the account may only be spent after appropriation.
Expenditures from the account may be used only for:
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Housing to support people with developmental disabilities, including acquisition, development, or construction of permanent housing, housing developments, or units, including new units in existing structures;
Up to 15 percent of the total cost of a housing project that qualifies under (a) of this subsection may include acquisition, development, or construction of nonresident spaces that are integral to the overall design and support successful community living;
Preservation, operations, and maintenance costs of housing for people with developmental disabilities;
Housing-related services for individuals with developmental disabilities;
Rental subsidies; and
Technical assistance to support nonprofit organizations in applying for this funding through the account in order to expand the pool of eligible developers for construction and long-term sustainable maintenance for housing that meets the needs of people with developmental disabilities.
Expenditures from the account must be grants or forgivable loans. For applications under this section, the department of commerce must use an application form and evaluation criteria separate from the application form and criteria for the Washington housing trust fund created in RCW 43.185A.130. The department of commerce must coordinate with the department of social and health services regarding any needed supportive services and make efforts to enact the recommendations of the housing needs study for individuals with intellectual and developmental disabilities, as provided in section 1068(6), chapter 332, Laws of 2021.
For the purposes of this section, the following definitions apply unless the context clearly requires otherwise.
"Forgivable loans" means a noninterest-bearing financial award that is forgiven in its entirety provided the borrower project continues to serve the original target group as described in subsection (2)(a) of this section for a period of at least 25 years.
"Grants" means a financial award that does not require payback, provided the grantee project continues to serve the original target group as described in subsection (2)(a) of this section for a period of at least 25 years.
"Housing-related services" means services that are provided to eligible households as described in subsection (2)(c) of this section, which have the purpose of helping the household gain, maintain, or increase housing stability. Housing-related services may include, but are not limited to: Case management; tenant education and supports; financial assistance for essential costs of housing; services to identify, locate, and secure housing; landlord mitigation; landlord or tenant dispute mediation; services to prevent eviction or loss of housing; assistance securing financial housing assistance, such as a voucher or subsidy; or assistance with tenant applications.
"Nonresidential spaces" means any space used to provide a service that benefits affordable housing development tenants as described in subsection (2)(a)(i) of this section, or the public including, but not limited to, health clinics, food banks, community centers, and early learning facilities.
The housing stability account is created in the state treasury. Receipts from the real estate transfer tax directed to this account pursuant to RCW 82.45.230 must be deposited into the account. Moneys in the account may only be spent after appropriation.
Expenditures from the account may be used only for housing operations, maintenance, and service costs for low-income households or extremely low-income households where a supplement to rent income is required to cover ongoing operating expenses.
For the purposes of this section, "operations, maintenance, and service costs" means grants for building operations, maintenance, or supportive service costs for housing projects that have received or will receive funding from the state housing trust fund, or other public capital funding programs, are affordable to low-income households or extremely low-income households with incomes at or below 60 percent of the area median income, and require a supplement to rent income to cover ongoing operating expenses.
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Grants provided under this section must fund overall developments and may be used to fund new or existing housing projects. Priority for use must be given to projects intended to house seniors, individuals with disabilities, or populations with prior experience of homelessness, including families with children.
Grantees may use these funds in partnership with permanent supportive housing programs administered by the office of apple health and homes created in RCW 43.330.181.
The legislative authority of any county or city must identify in the adopted budget the capital projects funded in whole or in part from the proceeds of the tax authorized in this section, and must indicate that such tax is intended to be in addition to other funds that may be reasonably available for such capital projects.
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Except where a county has imposed a tax pursuant to section 7 of this act, the legislative authority of any county or any city may impose an excise tax on each sale of real property in the unincorporated areas of the county for the county tax and in the corporate limits of the city for the city tax at a rate not exceeding one-quarter of one percent of the selling price. Except as provided in subsection (8) of this section, the revenues from this tax must be used by any city or county with a population of 5,000 or less and any city or county that does not plan under RCW 36.70A.040 for any capital purpose identified in a capital improvements plan and local capital improvements, including those listed in RCW 35.43.040.
Except as provided in subsection (8) of this section, after April 30, 1992, revenues generated from the tax imposed under this subsection (2) in counties over 5,000 population and cities over 5,000 population that are required or choose to plan under RCW 36.70A.040 must be used solely for financing capital projects specified in a capital facilities plan element of a comprehensive plan and housing relocation assistance under RCW 59.18.440 and 59.18.450. However, revenues (i) pledged by such counties and cities to debt retirement prior to April 30, 1992, may continue to be used for that purpose until the original debt for which the revenues were pledged is retired, or (ii) committed prior to April 30, 1992, by such counties or cities to a project may continue to be used for that purpose until the project is completed.
In lieu of imposing the tax authorized in RCW 82.14.030(2), the legislative authority of any county or any city may impose an additional excise tax on each sale of real property in the unincorporated areas of the county for the county tax and in the corporate limits of the city for the city tax at a rate not exceeding one-half of one percent of the selling price.
Taxes imposed under this section must be collected from persons who are taxable by the state under chapter 82.45 RCW upon the occurrence of any taxable event within the unincorporated areas of the county or within the corporate limits of the city, as the case may be.
Taxes imposed under this section must comply with all applicable rules, regulations, laws, and court decisions regarding real estate excise taxes as imposed by the state under chapter 82.45 RCW.
The definitions in this subsection (6) apply throughout this section unless the context clearly requires otherwise.
"City" means any city or town.
"Capital project" means those public works projects of a local government for planning, acquisition, construction, reconstruction, repair, replacement, rehabilitation, or improvement of streets; roads; highways; sidewalks; street and road lighting systems; traffic signals; bridges; domestic water systems; storm and sanitary sewer systems; parks; recreational facilities; law enforcement facilities; fire protection facilities; trails; libraries; administrative facilities; judicial facilities; river flood control projects; waterway flood control projects by those jurisdictions that, prior to June 11, 1992, have expended funds derived from the tax authorized by this section for such purposes; until December 31, 1995, housing projects for those jurisdictions that, prior to June 11, 1992, have expended or committed to expend funds derived from the tax authorized by this section or the tax authorized by RCW 82.46.035 for such purposes; and technology infrastructure that is integral to the capital project.
From July 22, 2011, until December 31, 2016, a city or county may use the greater of $100,000 or 35 percent of available funds under this section, but not to exceed $1,000,000 per year, for the operations and maintenance of existing capital projects as defined in subsection (6) of this section.
After May 13, 2021, through December 31, 2023, a city or county may use the greater of $100,000 or 35 percent of available funds under this section for the operation of, maintenance of, and service support for, existing capital projects, including the provision of services to residents of affordable housing or shelter units.
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Beginning July 1, 2025, instead of imposing the tax authorized in RCW 82.45.010(2), the legislative authority of any county may impose an excise tax on each sale of real property in the unincorporated areas of the county as follows:
Up to 0.20 percent of the portion of the selling price that is less than or equal to $500,000, except that a rural county may impose an excise tax of up to 0.25 percent of the portion of the selling price that is less than or equal to $500,000;
Up to 0.25 percent of the portion of the selling price that is greater than $500,000 and equal to or less than $1,500,000;
Up to 0.55 percent of the portion of the selling price that is greater than $1,500,000 and equal to or less than $3,000,000;
Up to 0.60 percent of the portion of the selling price that is greater than $3,000,000.
The sale of real property that is classified as timberland or agricultural land is subject to the tax imposed under this section at a rate of 0.25 percent of the selling price.
Revenues generated from the tax imposed under this section must be used solely for:
Financing capital projects;
Housing relocation assistance under RCW 59.18.440 and 59.18.450; and
The operation of, maintenance of, and service support for, existing capital projects, including the provision of services to residents of affordable housing or shelter units.
The legislative authority of any county or city must identify in the adopted budget the capital projects funded in whole or in part from the proceeds of the tax authorized in this section, and must indicate that such tax is intended to be in addition to other funds that may be reasonably available for such capital projects.
County treasurers are not responsible for verifying that the seller has properly classified real property reported on a real estate excise tax affidavit. The department is solely responsible for such verification as part of its audit responsibilities under RCW 82.45.150.
If a county has already implemented the tax authorized in RCW 82.45.010(2), the legislative authority may replace that excise tax with the excise tax set forth in this section.
The following definitions apply throughout this section unless the context clearly requires otherwise.
"Agricultural land" means farm and agricultural land and farm and agricultural conservation land, as those terms are defined in RCW 84.34.020, including any structures on such land.
"Capital project" means those public works projects of a local government for planning, acquisition, construction, reconstruction, repair, replacement, rehabilitation, or improvement of streets; roads; highways; sidewalks; street and road lighting systems; traffic signals; bridges; domestic water systems; storm and sanitary sewer systems; parks; recreational facilities; law enforcement facilities; fire protection facilities; trails; libraries; administrative facilities; judicial facilities; river flood control projects; waterway flood control projects; and technology infrastructure that is integral to the capital project.
"Rural county" means a county with a population density of less than 100 persons per square mile or a county smaller than 225 square miles as determined by the office of financial management pursuant to RCW 43.62.035.
"Timberland" means land classified under chapter 84.34 RCW or designated under chapter 84.33 RCW, including any structures and standing timber on such land, and standing timber sold apart from the land upon which it sits.
Except for revenues used after May 13, 2021, through December 31, 2023, as provided in subsection (3) of this section, the legislative authority of any county or city must identify in the adopted budget the capital projects funded in whole or in part from the proceeds of the tax authorized in this section, and must indicate that such tax is intended to be in addition to other funds that may be reasonably available for such capital projects.
Except where a county has imposed a tax pursuant to section 9 of this act, the legislative authority of any county or any city that plans under RCW 36.70A.040(1) may impose an additional excise tax on each sale of real property in the unincorporated areas of the county for the county tax and in the corporate limits of the city for the city tax at a rate not exceeding one-quarter of one percent of the selling price. Any county choosing to plan under RCW 36.70A.040(2) and any city within such a county may only adopt an ordinance imposing the excise tax authorized by this section if the ordinance is first authorized by a proposition approved by a majority of the voters of the taxing district voting on the proposition at a general election held within the district or at a special election within the taxing district called by the district for the purpose of submitting such proposition to the voters.
Revenues generated from the tax imposed under subsection (2) of this section must be used by such counties and cities solely for financing capital projects specified in a capital facilities plan element of a comprehensive plan, except that the greater of $100,000 or 35 percent of revenues may additionally be used for the operation of, maintenance of, and service support for, existing capital projects after May 13, 2021, through December 31, 2023. However, revenues (a) pledged by such counties and cities to debt retirement prior to March 1, 1992, may continue to be used for that purpose until the original debt for which the revenues were pledged is retired, or (b) committed prior to March 1, 1992, by such counties or cities to a project may continue to be used for that purpose until the project is completed.
Revenues generated by the tax imposed by this section must be deposited in a separate account after December 31, 2023.
As used in this section, "city" means any city or town and "capital project" means those public works projects of a local government for:
Planning, acquisition, construction, reconstruction, repair, replacement, rehabilitation, or improvement of streets, roads, highways, sidewalks, street and road lighting systems, traffic signals, bridges, domestic water systems, storm and sanitary sewer systems;
Planning, construction, reconstruction, repair, rehabilitation, or improvement of parks; and
Until January 1, 2026, planning, acquisition, construction, reconstruction, repair, replacement, rehabilitation, or improvement of facilities for those experiencing homelessness and affordable housing projects.
A county or city may use the greater of $100,000 or 25 percent of available funds, but not to exceed $1,000,000, for capital projects as defined in subsection (5)(c) of this section. The limits in this subsection do not apply to any county or city that used revenue under this section for the acquisition, construction, improvement, or rehabilitation of facilities to provide housing for the homeless prior to June 30, 2019.
A county or city using funds for uses in subsection (5)(c) of this section must document in its plan under RCW 36.70A.070(3) that it has funds during the next two years for capital projects in subsection (5)(a) of this section.
When the governor files a notice of noncompliance under RCW 36.70A.340 with the secretary of state and the appropriate county or city, the county or city's authority to impose the additional excise tax under this section is temporarily rescinded until the governor files a subsequent notice rescinding the notice of noncompliance.
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Beginning July 1, 2025, instead of imposing the tax authorized in RCW 82.46.035(2), the legislative authority of any county may impose an excise tax on each sale of real property in the unincorporated areas of the county as follows:
Up to 0.20 percent of the portion of the selling price that is less than or equal to $500,000, except that a rural county may impose an excise tax of up to 0.25 percent of the portion of the selling price that is less than or equal to $500,000;
Up to 0.25 percent of the portion of the selling price that is greater than $500,000 and equal to or less than $1,500,000;
Up to 0.55 percent of the portion of the selling price that is greater than $1,500,000 and equal to or less than $3,000,000;
Up to 0.60 percent of the portion of the selling price that is greater than $3,000,000.
The sale of real property that is classified as timberland or agricultural land is subject to the tax imposed under this section at a rate of 0.25 percent of the selling price.
Revenues generated from the tax imposed under this section must be used solely for:
Financing capital projects;
Housing relocation assistance under RCW 59.18.440 and 59.18.450; and
The operation of, maintenance of, and service support for, existing capital projects, including the provision of services to residents of affordable housing or shelter units.
The legislative authority of any county or city must identify in the adopted budget the capital projects funded in whole or in part from the proceeds of the tax authorized in this section, and must indicate that such tax is intended to be in addition to other funds that may be reasonably available for such capital projects.
County treasurers are not responsible for verifying that the seller has properly classified real property reported on a real estate excise tax affidavit. The department is solely responsible for such verification as part of its audit responsibilities under RCW 82.45.150.
If a county has already implemented the tax authorized in RCW 82.46.035(2), the legislative authority may replace that excise tax with the excise tax set forth in this section.
The following definitions apply throughout this section unless the context clearly requires otherwise.
"Agricultural land" means farm and agricultural land and farm and agricultural conservation land, as those terms are defined in RCW 84.34.020, including any structures on such land.
"Capital project" means those public works projects of a local government for planning, acquisition, construction, reconstruction, repair, replacement, rehabilitation, or improvement of streets; roads; highways; sidewalks; street and road lighting systems; traffic signals; bridges; domestic water systems; storm and sanitary sewer systems; parks; recreational facilities; law enforcement facilities; fire protection facilities; trails; libraries; administrative facilities; judicial facilities; river flood control projects; waterway flood control projects; and technology infrastructure that is integral to the capital project.
"Rural county" means a county with a population density of less than 100 persons per square mile or a county smaller than 225 square miles as determined by the office of financial management pursuant to RCW 43.62.035.
"Timberland" means land classified under chapter 84.34 RCW or designated under chapter 84.33 RCW, including any structures and standing timber on such land, and standing timber sold apart from the land upon which it sits.
This act may be known and cited as the affordable homes act.
This act takes effect January 1, 2026.