It’s been dubbed the Affordable Housing Act, but House Bill 1628, also known by most as the ‘Real Estate Tax Bill,’ proposes to increase the supply of affordable housing by allowing cities to adjust the state and local real estate excise tax.
The bill, sponsored by Rep. Frank Chopp (D-Seattle) made it out of committee and is now headed to the House.
WA Legislature passes state dinosaur bill, heads to governor’s desk
“Across the state, there is a housing crisis,” Chopp said in March. “There is a tremendous shortage of housing, and the great need is for homes for people with low incomes.”
“We have a very serious crisis in housing and I believe this is a tool to address it,” said April Berg (D-Mill Creek).
Republican Ed Orcutt (R-Kamala) told KIRO Newsradio that sellers will raise their sale prices to compensate for the higher taxes leading to more expensive housing.
“This goes in the opposite direction,” Orcutt concluded. “It actually hurts the housing crisis.”
Some real estate groups also oppose the bill. In a television commercial, Washington Realtors questioned the logic of raising taxes in a housing affordability crisis.
The bill would add a new tier of 4% to the portion of a property’s sales price of $5 million or more. Right now, the ceiling is 3%.
The proposed real estate excise tax’s revenue would be divided as:
- 30% to the Housing Trust Fund.
- 30% to the Apple Health and Homes program for permanent supportive housing to eradicate homelessness.
- 25% to support the operations and services associated with housing and ending homelessness.
- 15% to address the affordable housing needs for people with developmental disabilities.
The 15% used for people with developmental disabilities would generate a projected $20 million a year.
The overall budget projections of the bill say it will generate nearly $288 million during the 2026 fiscal year.
Real estate excise tax could become highest in nation with new bill
“Nobody likes to raise taxes. I don’t think anybody likes to pay them either, but taxes are how we pay for our civil society and the things that we need and the things that other people need that we want them to have,” Rep. Sharon Wylie (D-Vancouver) told The Columbian.
“We cannot wait, our communities cannot wait, and we need the state Legislature to act,” Tacoma Mayor Victoria Woodards told The Seattle Times.
The fate of HB 1628 is uncertain, with under three weeks of the session to go.
If approved, the tax could replace the governor’s proposed $4 billion tax levy for housing.