News

Proposal to give homeowners tax break for renting at affordable rates

SEATTLE — King County Assessor John Wilson is proposing a tax break for existing apartment landlords and homeowners who decide to rent out a basement or backyard cottage at below-market rates.

The idea is included in a bill currently being considered in Olympia, as an option that all counties in the state could opt into.

Tenants would qualify to live in such a unit if they make up to 80 percent of area median income. In King County, that would mean a single person making up to $46,100. For a family of four in King County, they could make up to $65,800 and qualify.

The landlord would then promise to rent the unit out at most for one-third of the tenant’s income, in exchange for getting local taxes waived on the square footage of that rental unit.

One would still need to pay state taxes to fund education.

Wilson, describing the potential target homeowner, said, “The kids grew up, they flew the coop, but you’ve got that finished basement, and you go, ‘well, what if we clean that up a little bit?’”

Because this would bring in less revenue, counties that opt into this would then need to adjust the tax rate for the rest of the property owners.

In King County, Wilson said that if 1,000 landlords participate, the average homeowner would see a $10 increase in annual property taxes.

When asked how he would respond to opponents who complain of too many of these taxes added on top of one another, Wilson said, “You’ve got a legitimate concern. And it’s one that I share with you. I think a growing challenge we have is over the flaws of our tax system.”

Jon Washburn, who lives in Wallingford, said he and his wife had been thinking about building a unit on top of their garage.

He said this idea appeals to him, because they could rent such a unit out to a grad student for example, and get a tax break in return.

He said he likes this idea better than some other proposals for affordable housing: “One of the concerns we have had is too much urban density and losing the character of the neighborhood. I think there’s some residual fear about that.”

Several mayors in King County recently proposed a similar tax shift, giving tax breaks to landlords of existing apartment complexes. That plan was more directed at multi-unit buildings and applied to tenants who met lower income thresholds.