Washington State House Democrats


Berg bill to provide predictable, sustainable funding for affordable housing heard in House Finance Committee

OLYMPIA – Earlier today, the House Finance Committee met to hear testimony on House Bill 2276, sponsored by Rep. April Berg, D-Mill Creek. The bill, also known as The Affordable Homes Act, will help fund affordable housing in Washington, while also reducing the share of taxes paid by lower- and middle-income families.

Every community in Washington is facing a lack of affordable housing and the crisis of increasing homelessness. Low housing vacancy rates and the growth in population have produced a tight housing market in which existing inventory is priced at a premium.

At the same time, household income increases for families with moderate and lower incomes have not kept pace with rent and purchase price increases, leaving more and more families at risk of homelessness. The problem is particularly acute for lower and fixed income households, including seniors, veterans, farmworkers, and people with disabilities.

“Having a home is a basic need, but our state’s housing ecosystem is not keeping pace and has left working families struggling and has exacerbated the homelessness crisis,” said Berg, Chair of the Finance Committee, and sponsor of the bill. “While recent state investments in housing have laid the foundation for success, these efforts must be sustained and expanded to ensure that everyone in our state has a safe and affordable place to live.”

The Affordable Homes Act will ensure that Washington has predictable, sustainable funding to increase the supply of affordable housing by decreasing the Real Estate Excise Tax (REET) and adding a Real Estate Transfer Tax (RETT) on high value properties, which are paid only at the time of sale of a property. The bill modifies the first REET rate tier, which is taxed at 1.1 percent, from a selling price of $525,000 to $750,000. It also imposes a new RETT of 1 percent on any property selling over $3,025,000 but is only calculated on the value over $3,025,000. In effect, these changes reduce or do not change taxes on any property sold for under $3,0250,000.

“If you’re selling a property worth less than $3.025 million, your taxes will either go down or stay the same,” said Berg. “The bill proposes a new tax on expensive properties, and the money collected will be used to create more affordable housing. This change makes sure the wealthiest individuals in Washington contribute more fairly to funding this essential community need, addressing issues within our current upside-down tax code.”

Revenues from the new Real Estate Transfer Tax will be distributed to accounts that fund affordable housing needs across a spectrum, including the Home Security Fund, the Apple Health & Homes Account, developmental disabilities housing and services, and the Housing Trust Fund, which includes supports to stabilize low-income housing and provide farmworker housing.

“This bill is good for my clients. It will mean that many properties sold in Spokane County – including the vast majority, if not all of the ones that my clients will sell – will receive a REET reduction. Reducing REETs for most property sellers while creating a new, dedicated way to pay for the affordable housing that my community needs is a win-win,” said Latrice Williams, a realtor from Spokane.

“We have an affordable housing crisis throughout our communities. it is negatively impacting small and large businesses, school districts, individuals, and families – it is indisputable. As a real estate agent and caring community member of King and Island Counties, I have a multi-level perspective on this,” said Peter Wolf, a realtor with 15 years’ experience in Seattle and former board member of the Seattle King County Realtors. “We need to do something about it. Adding a 1% transfer tax on properties that sell for over $3.025 million is a reasonable and effective way to help increase the supply of the affordable homes that we so desperately need. For the record, the REET is paid by the seller – not the buyer. This will not increase the list price of property for sale. The listing price is dictated by what the market will bear and by what the buyer can afford. Not by taxes and not by what profit the seller wishes to make.”

The full hearing on House Bill 2276 in the House Finance Committee can be viewed via TVW.