(1)
Introduction. This rule contains definitions of the terms used for
the senior citizen, persons with disabilities, and veterans with disabilities
property tax exemption described in
RCW
84.36.381 through
84.36.389.
(2)
Annuity. "Annuity" means a
series of long-term periodic payments, under a contract or agreement. It does
not include payments for the care of dependent children. For purposes of this
rule, "long-term" means a period of more than one full year from the annuity
starting date.
Annuity distributions must be included in "disposable income,"
as that term is defined in subsection (12) of this rule, regardless of whether
the distributions are taxable under federal law. A one-time, lump sum, total
distribution is not an "annuity" for purposes of this rule, and only the
taxable portion that would be included in federal adjusted gross income should
be included in disposable income.
(3)
Assessment year. "Assessment
year" means the year the assessor lists and values the principal residence for
property taxes. The assessment year is the calendar year prior to the year the
taxes are due and payable. The assessment year is the year before the claimant
receives the reduction in their property taxes because of the senior citizen,
persons with disabilities, and veterans with disabilities exemption.
(4)
Capital gain. "Capital gain"
means the amount the seller receives for property, other than inventory, over
that seller's adjusted basis in the property. The seller's initial basis in the
property is the property's cost plus taxes, freight charges, and installation
fees. In determining the capital gain, the seller's costs of transferring the
property to a new owner are also added onto the adjusted basis of the property.
If the property is acquired in some other manner than by purchase, the seller's
initial basis in the property is determined by the way the seller received the
property (e.g., property exchange, payment for services, gift, or inheritance).
The seller increases and decreases the initial basis of the property for events
occurring between the time the property is acquired and when it is sold (e.g.,
increased by the cost of improvements made later to the property).
(5)
Claimant. "Claimant" means a
person claiming the senior citizen, persons with disabilities, and veterans
with disabilities exemption by filing an application with the assessor in the
county where the property is located.
(6)
Combined disposable income.
"Combined disposable income" means the annual disposable income of the
claimant, the claimant's spouse or domestic partner, and any cotenant occupying
the residence for the assessment year, reduced by amounts paid by the claimant
or the claimant's spouse or domestic partner for their:
(a) Legally prescribed drugs;
(b) Home health care as defined in subsection
(18) of this rule;
(c) Nursing
home, boarding home, assisted living facility, or adult family home
expenses;
(d) Health care insurance
premiums for medicare under Title XVIII of the Social Security Act;
(e) Costs related to medicare supplemental
policies as defined in Title 42 U.S.C. Sec.
1395ss;
(f) Durable medical equipment, mobility
enhancing equipment, medically prescribed oxygen, and prosthetic devices as
defined in
RCW
82.08.0283 (see also WAC
458-20-18801);
(g) Long-term care insurance as defined in
RCW
48.84.020;
(h) Cost-sharing amounts as defined in
RCW
48.43.005;
(i) Nebulizers as defined in
RCW
82.08.803;
(j) Medicines of mineral, animal, and
botanical origin prescribed, administered, dispensed, or used in the treatment
of an individual by a person licensed under chapter 18.36A RCW;
(k) Ostomic items as defined in
RCW
82.08.804;
(I) Insulin for human use;
(m) Kidney dialysis devices; and
(n) Disposable devices used to deliver drugs
for human use, as defined in
RCW
82.08.935.
Disposable income is not reduced by any of the amounts in this
subsection (6) if payments are reimbursed by insurance or a government program
(e.g., medicare or medicaid). When the application is made, the combined
disposable income is calculated for the assessment year.
(7)
Cotenant.
"Cotenant" means a person who resides with the claimant and who has an
ownership interest in the residence.
(8)
County median household
income. "County median household income" means the median household
income estimates for the state of Washington by county of the legal address of
the principal place of residence, as published by the office of financial
management.
(9)
Department. "Department" means the state department of
revenue.
(10)
Depreciation. "Depreciation" means the annual deduction allowed to
recover the cost of business or investment property having a useful life of
more than one year. In limited circumstances, this cost, or a part of this
cost, may be taken as a section 179 expense on the federal income tax return in
the year business property is purchased.
(11)
Disability. "Disability"
means the inability to engage in any substantial gainful activity by reason of
any medically determinable physical or mental impairment which can be expected
to result in death or which has lasted or can be expected to last for a
continuous period of not less than 12 months.
RCW
84.36.383;
42 U.S.C. Sec.
423 (d)(1)(A).
(12)
Disposable income.
"Disposable income" means the adjusted gross income as defined in the Federal
Internal Revenue Code of 2001, and as amended after that date, plus all items
described below to the extent they are not included in or have been deducted
from adjusted gross income:
(a) Capital gains,
other than gain excluded from the sale of a principal residence that is
reinvested prior to the sale or within the same calendar year in a different
principal residence;
(b) Amounts
deducted for loss;
(c) Amounts
deducted for depreciation;
(d)
Pension and annuity receipts;
(e)
Military pay and benefits other than attendant-care and medical-aid payments.
Attendant-care and medical-aid payments are any payments for medical care, home
health care, health insurance coverage, hospital benefits, or nursing home
benefits provided by the military;
(f) Veterans benefits other than:
(i) Attendant-care payments and medical-aid
payments, defined as any payments for medical care, home health care, health
insurance coverage, hospital benefits, or nursing home benefits provided by the
VA;
(ii) Disability compensation,
defined as payments made by the VA to a veteran because of a service-connected
disability; and
(iii) Dependency
and indemnity compensation, defined as payments made by the VA to a surviving
spouse, child, or parent because of a service-connected death;
(g) Federal Social Security Act
and railroad retirement benefits;
(h) Dividend receipts; and
(i) Interest received on state and municipal
bonds.
(13)
Domestic partner. "Domestic partner" means a person registered
under chapter 26.60 RCW or a partner in a legal union of two persons, other
than a marriage, that was validly formed in another jurisdiction, and that is
substantially equivalent to a domestic partnership under chapter 26.60
RCW.
(14)
Domestic
partnership. "Domestic partnership" means a partnership registered under
chapter 26.60 RCW or a legal union of two persons, other than a marriage, that
was validly formed in another jurisdiction, and that is substantially
equivalent to a domestic partnership under chapter 26.60 RCW.
(15)
Excess levies. "Excess
levies" has the same meaning as provided in WAC
458-19-005 for "excess property
tax levy."
(16)
Excluded
military pay or benefits. "Excluded military pay or benefits" means
military pay or benefits excluded from a person's federal gross income, other
than those amounts excluded from that person's federal gross income for
attendant-care and medical-aid payments. Members of the armed forces receive
many different types of pay and allowances. Some payments or allowances are
included in their gross income for federal income tax purposes while others are
excluded. Excluded military pay or benefits include:
(a) Compensation for active service while in
a combat zone or a qualified hazardous duty area;
(b) Death allowances for burial services,
gratuity payment to a survivor, or travel of dependents to the burial
site;
(c) Moving
allowances;
(d) Travel
allowances;
(e) Uniform
allowances;
(f) Group term life
insurance payments made by the military on behalf of the claimant, the
claimant's spouse or domestic partner, or the cotenant; and
(g) Survivor and retirement protection plan
premiums paid by the military on behalf of the claimant, the claimant's spouse
or domestic partner, or the cotenant.
(17)
Family dwelling unit.
"Family dwelling unit" means the dwelling unit occupied by a single person, any
number of related persons, or a group not exceeding a total of eight related
and unrelated nontransient persons living as a single noncommercial
housekeeping unit. The term does not include a boarding or rooming
house.
(18)
Home health
care. "Home health care" means the treatment or care of either the
claimant or the claimant's spouse or domestic partner received in the home. It
must be similar to the type of care provided in the normal course of treatment
or care in a nursing home, although the person providing the home health care
services need not be specially licensed. The treatment and care must meet at
least one of the following criteria. It must be for:
(a) Medical treatment or care received in the
home;
(b) Physical therapy received
in the home;
(c) Food, oxygen,
lawful substances taken internally or applied externally, necessary medical
supplies, or special needs furniture or equipment (such as wheel chairs,
hospital beds, or therapy equipment), brought into the home as part of a
necessary or appropriate in-home service that is being rendered (such as a
meals on wheels type program); or
(d) Attendant care to assist the claimant, or
the claimant's spouse or domestic partner, with household tasks, and such
personal care tasks as meal preparation, eating, dressing, personal hygiene,
specialized body care, transfer, positioning, ambulation, bathing, toileting,
self-medication a person provides for himself or herself, or such other tasks
as may be necessary to maintain a person in their own home, but does not
include improvements or repair of the home itself.
(19)
Income threshold 1. "Income
threshold 1" means:
(a) For taxes levied for
collection in calendar years prior to 2020, a combined disposable income equal
to $30,000;
(b) For taxes levied
for collection in calendar years 2020 through 2023, a combined disposable
income equal to the greater of "income threshold 1" for the previous year or 45
percent of the county median household income; and
(c) For taxes levied for collection in
calendar year 2024 and thereafter, a combined disposable income equal to the
greater of "income threshold 1" for the previous year or 50 percent of the
county median household income, adjusted every three years beginning August 1,
2023, and by March 1st every third year thereafter, as provided in
RCW
84.36.385(8).
(20)
Income threshold
2. "Income threshold 2" means:
(a) For
taxes levied for collection in calendar years prior to 2020, a combined
disposable income equal to $35,000;
(b) For taxes levied for collection in
calendar years 2020 through 2023, a combined disposable income equal to the
greater of "income threshold 2" for the previous year or 55 percent of the
county median household income; and
(c) For taxes levied for collection in
calendar year 2024 and thereafter, a combined disposable income equal to the
greater of "income threshold 2" for the previous year or 60 percent of the
county median household income, adjusted every three years beginning August 1,
2023, and by March 1st every third year thereafter, as provided in
RCW
84.36.385(8).
(21)
Income threshold
3. "Income threshold 3" means:
(a) For
taxes levied for collection in calendar years prior to 2020, a combined
disposable income equal to $40,000;
(b) For taxes levied for collection in
calendar years 2020 through 2023, a combined disposable income equal to the
greater of "income threshold 3" for the previous year or 65 percent of the
county median household income; and
(c) For taxes levied for collection in
calendar year 2024 and thereafter, a combined disposable income equal to the
greater of "income threshold 3" for the previous year or 70 percent of the
county median household income, adjusted every three years beginning August 1,
2023, and by March 1st every third year thereafter, as provided in
RCW
84.36.385(8).
(22)
Lease for life.
"Lease for life" means a lease that terminates upon the death of the
lessee.
(23)
Legally
prescribed drugs. "Legally prescribed drugs" means drugs supplied by
prescription of a medical practitioner authorized to issue prescriptions by the
laws of this state or another jurisdiction.
(24)
Life estate. "Life estate"
means an estate whose duration is limited to the life of the party holding it
or of some other person.
(a) Reservation of a
life estate upon a principal residence placed in trust or transferred to
another is a life estate.
(b)
Beneficial interest in a trust is considered a life estate for the settlor of a
revocable or irrevocable trust who grants to themselves the beneficial interest
directly in their principal residence, or the part of the trust containing
their personal residence, for at least the period of their life.
(c) Beneficial interest in an irrevocable
trust is considered a life estate, or a lease for life, for the beneficiary who
is granted the beneficial interest representing their principal residence held
in an irrevocable trust, if the beneficial interest is granted under the trust
instrument for a period that is not less than the beneficiary's life.
(25)
Owned. "Owned"
includes "contract purchase" as well as "in fee," a "life estate," and any
"lease for life." A residence owned by a marital community or domestic
partnership or owned by co-tenants is deemed to be owned by each spouse or each
domestic partner or each cotenant.
(26)
Ownership by a marital community
or domestic partnership. "Ownership by a marital community or domestic
partnership" means property owned in common by both spouses or domestic
partners. Property held in separate ownership by one spouse or domestic partner
is not owned by the marital community or domestic partnership. The person
claiming the exemption must own the property for which the exemption is
claimed. For example, a person qualifying for the exemption by virtue of age,
disability, or disabled veteran status may not claim this exemption on a
residence owned by the person's spouse or domestic partner as a separate estate
outside the marital community or domestic partnership unless the claimant has a
life estate in that separate estate.
(27)
Pension. "Pension"
generally means an arrangement providing for payments, not wages, to a person
or to that person's family, who has fulfilled certain conditions of service or
reached a certain age. Pension distributions may be triggered by separation
from service, attainment of a specific age, disability, death, or other events.
A pension may allow payment of all or a part of the entire pension benefit, in
lieu of regular periodic payments.
(28)
Principal residence.
"Principal residence" means the claimant owns and occupies the residence as
their principal or main residence. It does not include a residence used merely
as a vacation home. For purposes of this exemption:
(a) Principal or main residence means the
claimant occupies the residence for more than six months each calendar
year.
(b) Confinement of the
claimant to a hospital, nursing home, assisted living facility, adult family
home, or home of a relative for the purpose of long-term care, does not
disqualify the claim for exemption if:
(i) The
residence is temporarily unoccupied;
(ii) The residence is occupied by the
claimant's spouse or domestic partner or a person financially dependent on the
claimant for support;
(iii) The
residence is occupied by a caretaker who is not paid for watching the
house;
(iv) The residence is rented
for the purpose of paying nursing home, hospital, boarding home, or adult
family home costs.
(c)
For purposes of this subsection, "relative" means any individual related to the
claimant by blood, marriage, or adoption.
(29)
Regular gainful employment.
"Regular gainful employment" means consistent or habitual labor or service
which results in an increase in wealth or earnings.
(30)
Regular property tax
levies. "Regular property tax levies" has the same meaning as provided
in WAC
458-19-005 for "regular property
tax levy."
(31)
Replacement
residence. "Replacement residence" means a residence that qualifies for
the senior citizen, persons with disabilities, and veterans with disabilities
exemption and replaces the prior residence of the person receiving the
exemption.
(32)
Residence. "Residence" means a single-family dwelling unit whether
the unit is separate or part of a multiunit dwelling and includes up to one
acre of the parcel of land on which the dwelling stands. A residence also
includes any additional property up to a total of five acres that comprises the
residential parcel if land use regulations require this larger parcel size. The
term also includes:
(a) A share ownership in a
cooperative housing association, corporation, or partnership if the person
claiming exemption can establish that his or her share represents the specific
unit or portion of the structure in which they reside.
(b) A single-family dwelling situated on
leased lands and on lands the fee of which is vested in the United States, any
instrumentality thereof including an Indian tribe, the state of Washington, or
its political subdivisions.
(c) A
mobile home which has substantially lost its identity as a mobile unit by being
fixed in location on land owned or rented by the owner of the mobile home and
placed on a foundation, posts, or blocks with fixed pipe connections for sewer,
water or other utilities even though it may be listed and assessed by the
county assessor as personal property. It includes up to one acre of the parcel
of land on which the mobile home is located if both the land and mobile home
are owned by the same qualified claimant. It also includes any additional
property up to a total of five acres that comprises the residential parcel if
land use regulations require this larger parcel size.
(33)
Veteran. "Veteran" means a
veteran of the armed forces of the United States.
(34)
Veteran with disabilities.
"Veteran with disabilities" means a veteran of the armed forces of the United
States entitled to and receiving compensation from the United States Department
of Veterans Affairs (VA) at:
(a) A combined
service-connected evaluation rating of 80 percent or higher; or
(b) A total disability rating for a
service-connected disability without regard to evaluation percent.
(35)
Veterans
benefits. "Veterans benefits" means benefits paid or provided under any
law, regulation, or administrative practice administered by the VA. Federal law
excludes from gross income any veterans' benefits payments, paid under any law,
regulation, or administrative practice administered by the VA.