State legislature increases income limits

Property tax deferral program limit increased to $40,000

More seniors and disabled persons will qualify for property tax relief under higher household income limits adopted by the Washington State Legislature during the 2004 session.

Statewide, approximately 113,000 participating homeowners currently save nearly $121 million per year in taxes.

The Legislature increased to $35,000 the amount of annual household income they can earn and still qualify for reductions in their property taxes. The previous limit had been $30,000. Seniors must be at least 61 during the year they apply for tax relief to take effect the following tax year.

The higher limits apply to 2004 income used to determine eligibility for tax relief for taxes due in 2005. The tax relief is limited to owner-occupied residences and no more than one acre of property. Any property in excess of one acre is taxed at regular rates.

Income thresholds and corresponding exemption amounts have changed as follows: $30,001 to $35,000 are exempt from 100 percent of all voter-approved (excess) levies; $25,001-$30,000 are exempt from 100 percent of all excess levies and exempt from regular levies on the greater of $50,000 or 35 percent of the frozen assessed value, not to exceed $70,000. Zero to $25,000 are exempt from 100 percent of all excess levies and exempt from regular levies on the greater of $60,000 or 60 percent of the frozen assessed value.

As before, the assessed valuation of a residence and up to one acre of land is frozen at its assessed value as of Jan. 1 of the year someone applies for the tax relief. Taxes will only be applied to the frozen value for the years the participant qualifies for the program. This provision applies to any approved applicant with $35,000 or less of household income.

Household gross income includes disposable of the homeowner and spouse and any co-tenants with ownership interest in the house. It does not include income of co-owners who do not live in the home. Only the applicant must meet the age or disability requirements. Eligibility is determined by disposable gross income received during the calendar year when a person applies.

Disposable gross income includes any wages, Social Security (excluding Medicare premiums), pension or individual retirement account payments, interest and dividends and any business, rental or capital gains income. Gross income now can be reduced by non-reimbursed costs for adult family or boarding homes and qualified in-home care, in addition to the previously allowed cost of nursing home care or an in-home care program. A person still qualifies for tax relief if he or she is confined to a hospital, adult family home, boarding home or nursing home and rents the home to pay for their care.

In addition, the definition of disability now is linked to the definition used for social security purposes, which is 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 …"

The new legislation also increased to $40,000 per year the income limit for a related property tax deferral program. The previous limit has been $34,000. Because the effective date of the legislation is June 10,2004, a qualified applicant may defer the second half 2004 taxes based on the higher income threshold.

For more information on these programs, please call 509-754-2011 ext. 383 or visit the Web site, www.co.grant.wa.us/.