Outside of Compass Health’s Andy’s Place residence on Wednesday, Nov. 29, 2023 in Everett, Washington. (Olivia Vanni / The Herald)

Outside of Compass Health’s Andy’s Place residence on Wednesday, Nov. 29, 2023 in Everett, Washington. (Olivia Vanni / The Herald)

Bill would up taxes on high-value home sales, boost affordable housing

Rep. April Berg’s proposal would dedicate revenue to housing for farmworkers and people with developmental disabilities.

OLYMPIA — To address a housing crisis, a Mill Creek Democrat wants to tick up the tax on sales of expensive properties.

For properties sold for over $3 million, an additional 1% transfer tax would be tacked on the original 3% excise tax, under Rep. April Berg’s House Bill 2276. The seller would pay the tax and the revenue would be routed to a fund to build affordable housing across the state.

One focus of the spending would be building homes for people with developmental disabilities.

Scott Livengood, the CEO of Bothell-based Alpha Supported Living Services, said a steady supply of affordable housing is crucial. On average, people with developmental disabilities live on a fixed income of about $900 per month, he said.

“We’re reliant upon finding affordable housing for them to live,” said Livengood, whose nonprofit provides homes for people in Snohomish, King and Spokane counties.

In four years, the number of people in supported living across the state has decreased by around 300 due to both a housing affordability crisis and workforce shortage, Livengood said.

If the “Affordable Housing Act” passes, it will be the first time the state set aside a dedicated revenue stream to build housing for people with developmental disabilities, Livengood said.

Of the new tax, 15% would be dedicated to causes like Livengood’s. In its first three years, the proposal is expected to generate almost $400 million, according to the state Office of Financial Management.

While one part of Berg’s bill focuses on a tax increase, she said another aspect would mean a tax break for the majority of Washingtonians.

Currently, the lowest tax rate for selling a home is 1.1%, for homes sold for $525,000 or less.

Berg’s bill would raise that first tier up to $750,000, creating a bigger bracket where sellers would have to pay less in taxes. As sales get more expensive, they’re taxed more.

“If you sell a house today, you’re going to pay more in taxes than you will tomorrow under this bill,” she said.

The bill only has support from Democrats.

In a press conference last week, House Minority Leader Drew Stokesbary, R-Auburn, said the tax would hurt the sale of multi-family housing.

“You can’t make housing more affordable by making it more expensive,” he said.

The Master Builders Association of King and Snohomish Counties also opposes the legislation, over concerns of high land costs.

Scott Hazlegrove, representing the association, said Thursday the tax would push land costs up, an expense that would trickle down through the development and eventual sale of the home.

“While there’s an opportunity to build more dense housing,” he told the House Finance Committee, “we still end up with high land costs.”

Marty Miller, the executive director of the Office of Rural and Farmworker Housing, said it would provide dedicated revenue for his nonprofit, which primarily serves low-income residents.

“To build affordable housing, you need affordable sources of capital and House Bill 2276 helps get us there,” he said.

For Berg, the bill goes beyond affordable housing. It’s also about addressing disparities in the state’s tax system.

Washington’s tax code is regressive, according to the state’s Department of Revenue. Without an income tax, the state gets the majority of revenue from sales and use taxes.

The real estate excise tax rate used to be a flat 1.28% for all property sales. In 2019, Democrats pushed a law that created a graduated scale for the excise tax.

Here are the current tax rates for property sales:

• $525,000 or less: 1.10%

• $525,000.01 to $1,525,000: 1.28%

• $1,525,000.01 to $3,025,000: 2.75%

• $3,025,000.01 or more: 3%

In Snohomish County, a local rate of 0.5% is added to the total. The one exception is Darrington, where the local rate is 0.25%.

If passed, the measure would go into effect in January 2026.

Here is how the money would be divided:

• 25% to the Housing Trust Fund, with 5% to prioritize housing for low-income farmworker households;

• 25% to the Apple Health and Homes account;

• 25% to the Affordable Homes for All account;

• 15% to the Developmental Disabilities Housing and Services account;

• 10% to the Housing Stability account.

Jenelle Baumbach: 360-352-8623; jenelle.baumbach@heraldnet.com; Twitter: @jenelleclar.

Talk to us

> Give us your news tips.

> Send us a letter to the editor.

> More Herald contact information.

More in Local News

A Cessna 150 crashed north of Paine Field on Friday evening, Feb. 16, 2024, in Mukilteo, Washington. The pilot survived without serious injury. (Courtesy of Richard Newman.)
Small plane lost power in crash north of Paine Field, flight club says

The pilot reportedly called 911, stuck in a tree, on Friday. The sole occupant survived “without a scratch,” the president of Puget Sound Flyers said.

The PUD Everett Substation on Tuesday, Feb. 13, 2024 in Everett, Washington. (Annie Barker / The Herald)
Delta residents rip PUD power line plan to cut through neighborhood

The PUD said the poles will connect two Everett power stations amid “increasing electrical demand.” Locals feel it shows a lack of “forethought.”

IonQ CEO Peter Chapman, left, and Sen. Maria Cantwell, right, cut a ribbon during an IonQ event at their research and manufacturing facility on Thursday, Feb. 15, 2024 in Bothell, Washington. (Annie Barker / The Herald)
Nation’s first quantum computing manufacturing plant opens in Bothell

IonQ, a Maryland-based firm, expects to add hundreds of jobs and invest $1 billion in the region over the next 10 years.

Snohomish County Jail. (Sue Misao / Herald file)
Arlington woman arrested in 2005 case of killed baby in Arizona airport

Annie Sue Anderson, 51, has been held in the Snohomish County Jail since December. She’s facing extradition.

Ken Florczak, president of the five-member board at Sherwood Village Mobile Home community on Tuesday, Feb. 13, 2024 in Mill Creek, Washington. (Olivia Vanni / The Herald)
How Mill Creek mobile home residents bought the land under their feet

At Sherwood Village, residents are now homeowners. They pay a bit more each month to keep developers from buying their property.

Lake Serene in Mount Baker-Snoqualmie National Forest. (U.S. Forest Service)
How will climate change affect you? New tool gives an educated guess

The Climate Vulnerability Tool outlines climate hazards in Snohomish County — and it may help direct resources.

Shirley Prouty (Submitted photo)
Shirley Prouty, Arlington historian and grandma to all, dies at 92

Prouty chronicled “100 Years of Arlington” in a series of books. “She’d turn over any rock,” a former mayor said.

Arlington man suspected of DUI in fatal I-5 crash

Police said the man was driving the wrong way south of Tacoma and crashed into another car. Angelica Roberto Campos, 52, later died.

Feds fine Everett test lab for alleged animal welfare violations

Altasciences was cited for five alleged violations in the last two years that resulted in animal injuries and deaths.

Librarian Andrea Wallis leads activities during Toddler Storytime at the Main Everett Library on Tuesday, Feb. 13, 2024 in Everett, Washington. (Annie Barker / The Herald)
Everett library trustees ‘ideally’ don’t want to merge with Sno-Isle

City finance staff see three options to deal with a $12.9 million deficit: a library merger, a fire department merger, or a new property tax.

A student reaches put their hands to feel raindrops as it begins to pour on Monday, Jan. 22, 2024 in Camano Island, Washington. (Olivia Vanni / The Herald)
‘Hollow gestures’ won’t allow Camano forest school to survive, founders say

Island County officials acknowledged they should have given Springwood Forest School families more time to prepare for an impending closure.

Logo for news use featuring Snohomish County, Washington. 220118
Driver killed in crash east of Snohomish

The man crashed off the road Monday morning in the Three Lakes area. Nobody else was injured.

Support local journalism

If you value local news, make a gift now to support the trusted journalism you get in The Daily Herald. Donations processed in this system are not tax deductible.