WashingtonHB 17912025-2026 Regular SessionHouseWALLET

Increasing the flexibility of existing funding sources to fund public safety and other facilities by modifying the local real estate excise tax.

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Bill Overview

Analyzed Economic Effects

6 provisions identified: 5 benefits, 1 costs, 0 mixed.

Cities gain broader capital project funding options

Washington cities and counties can use local real estate excise tax revenue for a wider range of planned capital projects. The law removes former population and planning distinctions and allows uses eligible under the additional local tax. Funded projects must appear in the adopted budget. The budget must say this tax money supplements other funds reasonably available for those projects.

More local tax flexibility for facility operations

Eligible cities and counties can use the greater of $100,000 or 35% of available funds from each local real estate excise tax for existing capital projects' operations, maintenance, and service support. This includes services for affordable-housing or shelter residents, and the authority is no longer temporary. The additional-tax allowance no longer has an annual $1 million cap. Eligibility generally excludes places that enacted specified property listing, sale, or landlord improvement requirements after June 9, 2016. Exceptions cover requirements authorized by specified state or federal laws and certain seller or landlord disclosures; the first tax also allows an immediate health or safety exception.

More local funding flexibility for affordable housing

Local governments can keep using additional real estate excise tax revenue for affordable housing and homelessness facilities, including interlocal housing projects. The housing capital-project allowance is the greater of $100,000 or 25% of available funds; the old $1 million cap is removed. These limits do not apply where local governments funded specified homeless-housing work before June 30, 2019. Counties that choose to plan under the state's growth-management law, and their cities, need voter approval to impose this tax. Governments using funds for housing or homelessness must document funding for required core capital projects over the next two years.

Tax breaks for affordable housing community spaces

Beginning January 1, 2026, qualifying community-space sales in affordable housing developments are exempt from Washington's real estate excise tax. Buyers must be eligible nonprofits, housing authorities, or public corporations. The space must be a separate legal parcel, accessible to tenants or the public, and used for a community purpose. Examples include clinics, food banks, and early learning centers. The development must qualify for a listed property-tax exemption and serve households earning no more than 80% of county median income at move-in, adjusted for household size.

Tax relief for mobile home community sellers

Qualifying sales of manufactured or mobile home communities are exempt from Washington's real estate excise tax. The law removes the old cutoff covering only sales before December 31, 2018. This exemption covers qualifying community sales, not all sales of individual manufactured or mobile homes.

Limits on affordable housing transfer tax breaks

Washington limits the real estate excise tax exemption for transfers of qualifying low-income housing or a controlling ownership interest. The exemption requires federal low-income housing tax credits allocated to the seller or qualifying owner. It is unavailable when the seller faces credit repayment for noncompliance within the four years before the transfer. The exemption ends for transfers on or after July 1, 2035.

Sponsors & Cosponsors

Sponsor

Dave Paul
Democratic • House

Cosponsors

Alex Ramel
Democratic • House
Greg Nance
Democratic • House
Larry Springer
Democratic • House
Mari Leavitt
Democratic • House
Sam Low
Republican • House
Strom Peterson
Democratic • House

Roll Call Votes

All Roll Calls

Yes: 89 • No: 56

Senate vote • 4/15/2025

3rd Reading & Final Passage

Yes: 29 • No: 19 • Other: 1

House vote • 3/6/2025