The 2019 Legislative Session ended April 28 and Washington REALTORS® had some big wins. We got REALTORS® exempted from a 20% B&O tax increase, killed an effort to undermine “in-house” transactions and passed much of our “Unlock the Door” campaign’s affordable housing agenda, including condo liability reform.
Protecting Our Members
Our trade association’s primary purpose is to protect our members. With that in mind, we were successful in fighting off a direct tax increase on your bottom line. Although the Legislature passed a 20% B&O tax increase that hit most service businesses, REALTORS® were not included. We reminded the Legislature that the B&O Small Business Tax Credit does not apply to REALTORS® because commissions are pooled, and they agreed that exempting REALTORS® was both fair and a reasonable policy decision.
Additionally, we protected the foundation of the industry’s business model. When a bill was introduced that would have changed many independent contractors to employees, we made sure REALTORS® were exempted.
Protecting Your Clients
From the first days of the Legislative Session, we knew that the Legislature was committed to a Tiered Real Estate Excise Tax, based on the idea that higher priced properties would pay more in REET. Although we did not support this proposal, the Legislature listened to us when we spoke and made significant changes, with the result that approximately 90% of transactions will pay the same or less Real Estate Excise Tax. All Transactions up to $500,000 will get approximately a 15% cut in REET. In fact, due to the marginal nature of the new tiered tax (a REALTOR® suggestion), all transactions up to about $1.75M should not be impacted. While this tax impacts commercial real estate and multifamily, it is hoped that the marginal nature of the tax structure will limit that impact. These new rates will not take effect until January 1, 2020.
Protecting the Transaction
Very early in the session, a bill was introduced in both the House and Senate to require all parties in an “in-house” transaction to have an attorney sign off at every step in the transaction. Obviously, this bill would make real estate more expensive for consumers and greatly impede transactions. Washington REALTORS® jumped in and made sure this proposal did not even make it out of Committee in either the House or the Senate.
Thanks to great work from our Washington REALTORS® Condominium Work Group and some passionate members across the state, Washington REALTORS® was able to help pass condominium liability reform that continues to protect the consumer but adds a fairer standard that should encourage developers to start building condominiums again. After looking at the more balanced bill, one developer told us that once developers got comfortable with the new regulations, we should expect a “mini condo boom” in Washington. Additionally, while working with a number of stakeholders, we passed a bill that encourages cities to adopt growth policies that allow for additional density in a responsible way, including Accessory Dwelling Units, allowing duplexes and triplexes in single family zoning and cluster zoning or lot size averaging allowances.