SB 5529 — Amending the county population threshold for counties that may exempt from taxation the value of accessory dwelling units to incentivize rental to low-income households.

S-0155.1ENGROSSED SENATE BILL 5529 State of Washington 69th Legislature 2025 Regular Session By Senator Gildon AN ACT Relating to amending the county population threshold for counties that may exempt from taxation the value of accessory dwelling units to incentivize rental to low-income households;

1 SBESB 5529 The department of revenue shall promulgate such rules and regulations as are necessary and convenient to properly administer the provisions of this subsection (1).

(2)(a) A county legislative authority ((forfor a county with a population of 1,500,000 or more))more or a city or county legislative authority located in a county with a population of at least 900,000 but not more than 1,500,000 may exempt from taxation the value of an accessory dwelling unit if the following conditions are met:

(ii) The taxpayer demonstrates that the unit is maintained as a rental property for low-income households.households by submitting an affidavit stating the tenant's income and a document that demonstrates the tenant's income.

(iii) The taxpayer files notice of the taxpayer's intention to participate in the exemption program on forms prescribed by and furnished to the taxpayer by the county assessor;assessor, including verification of the tenant's income through an affidavit as described in (a)(ii) of this subsection (2), and a copy of a lease that is at least 12 months in duration and includes the rent rate;

and((and)) (v) The accessory dwelling unit is not occupied by an immediate family member of the taxpayer.

For purposes of this subsection (2)(a), "immediate family" means any person under age sixty that is a state registered domestic partner, spouse, parents, grandparents, children, including foster children, siblings, and in-laws.in-laws;

(b)and An(vi) exemptionIf grantedlocated underin thisa subsectioncounty (2)with maya continuepopulation forof asat longleast as900,000 but not more than 1,500,000, the exemptedcity accessorylegislative dwellingauthority unitor isthe leasedcounty tolegislative authority passes a low-incomeresolution household.authorizing the exemption to be offered within the geographic boundaries of the city or county.

(c)The Aresolution countymust outline the process whereby the enacting legislative authority thatwill hasprovide optedthe county assessor with information to exemptverify accessorythat dwellingboth unitsthe underlow-income thishousehold subsectionand (2)the may:p.

2 ESB 5529 taxpayer are in compliance with the requirements of this subsection (2).

(b) An exemption granted under this subsection (2) must be applied for annually but may continue for as long as the exempted accessory dwelling unit is leased to a low-income household.

(c) A county legislative authority with a population greater than 1,500,000 that has opted to exempt accessory dwelling units under this subsection (2) may:

The designated official or agent may not be the county assessor but may p.include housing authorities or other qualified organizations as determined by the county legislative authority;

2 SB 5529 include housing authorities or other qualified organizations as determined by the county legislative authority;

(d) AIf countylocated legislativein authoritya thatcounty haswith opteda topopulation exemptof accessoryat dwellingleast units900,000 underbut thisnot subsectionmore (2)than shall1,500,000, establishthe policiesfollowing toapplies: assist and support tenants upon expiration of an exemption granted under this subsection.

(i) The exemption must only apply to detached units on the same real property.

(ii) The assessor may collect a fee from the taxpayer in an amount necessary to cover the costs of administering this section.

(iii) The assessor may determine what property tax and penalties will be due, if any, in the case that the enacting legislative authority finds noncompliance by a taxpayer.

(e) A ((county)) legislative authority that has opted to exempt accessory dwelling units under this subsection (2) shall establish policies to assist and support tenants upon expiration of an exemption granted under this subsection (2), such as providing information on services available at the time of expiration.

(1) This section is the tax preference performance statement for the tax preferences contained in section 1, chapter 335, Laws of 2023 andp. section 1, chapter .

3 ESB 5529 and section 1, chapter .

This performance statement is only intended to be used for subsequent evaluation of the tax preferencepreferences. s.

., Laws of 2025 (section 1 of this act) as ((it applies)) they apply specifically to the property tax exemption for accessory dwelling units and complete a final report by December 1, 2029.((2029)) 2027.

p.(A) The number of taxpayers filing notice to participate in the exemption program;

3 SB 5529 (A) The number of taxpayers filing notice to participate in the exemption program;

and (iv)p. An evaluation of the impacts of the program on low-income households.

(b)4 IfESB the5529 review(iv) findsAn thatevaluation aof county ((with a population greater than 1,500,000)) offers this exemption and the exemptionimpacts increasesof the amountprogram ofon accessory dwelling units rented to low-income households,households. then the legislature intends to extend the expiration date of ((this)) these tax preferences.

(b) If the review finds that a county with a population greater than 1,500,000 or a city or county legislative authority located in a county with a population of at least 900,000 but not more than 1,500,000 offers this exemption and the exemption increases the amount of accessory dwelling units rented to low-income households, then the legislature intends to extend the expiration date of ((this)) these tax preferences.

45 SBESB 5529