Increasing Real Estate Tax Rates
At the Washington State Legislator, HB1628 – Increase affordable housing by modifying real estate excise tax rates is being discussed on Tuesday, 2/7, and Friday, 2/10/23 this week. Please,”testify”.
There are four funds that the money will be divided between. I’d like to see exactly what each one plans to do with the money. Having some kind of accountability would make it a lot easier to see if this tax increase is really a good idea. Does this increase really help to supply more affordable housing, or does it increase a slush fund for the State?
The Dept of Commerce collects and deposits the money:
30% to The Washington Housing Trust Fund,
30% to The Apple Health and Homes Account,
25% to The Affordable Housing for All Account, and
15% to Developmental Disabilities Trust Account.
Follow the Money
Where does the money actually go? It is a sizeable tax increase, creating a large chunk of change for the 4 account holders appointed. 50% on construction/acquisition of affordable housing, and 50% on operations, maintenance, and services. Unrealistic, doesn’t it usually cost more to build a complex than it does to maintain it?
Through December 2019, the sales tax percentage was 1.28% on all sales straight across the board. There were no increases in higher-priced sales. This bill changes the tax percentage when sales happen at higher values.
New Tax Percentages
January 1, 2020
1.10% of sale prices < $500,000
1.28% of sale prices between >$500,000-$1,500,000
2.75% of sale prices between $1,500,000-$3,000,000
3.00% of sale prices between $3,000,000-$5,000,000
4.00% of sale prices >$5,000,000 (January 2025 this level begins)
On the sale of a 750,000 home, the sales & use tax would work out to
1.28% x 750,000 = $9,600
On the sale of a 7,000,000 hom
4% x 7,000,000 =$280,000
Compared to the old percentage rate of 1.28% x 7,000,000 = $89,600
80% of the Median income for a Family of four is below $7562/month.
60% of the Median income for a Family of four is below $4537/month.
50% of the Median income for a Family of four is below $2269/month.
30% of the Median income for a Family of four is $1579/month.
“Affordable Housing” is when (rental) rates for a family of four in the 60% median income range (4,537) do not exceed 30% of that income. That family is allowed a maximum rent of $1,361 per month.