With less than a month to go before the start of the 105-day 2019 Legislative session, I want to share a few issues with our members that I believe will be considered during the session.
We need to be ready for a variety of tax proposals that would have a negative impact on the commercial real estate industry. For the past several years progressive tax supporters have introduced Capital Gains Income Tax proposals. While single-family residences and four unit or fewer multi-family units have been exempted from these bills, the balance of commercial real estate is included. Many small commercial real estate investors would be subject to a new 7-8% Capital Gains “income” tax.
We’ll likely see proposals to increase the Business and Occupation tax for service industry providers from the current 1.5% rate.
The progressive tax reform group will also re-introduce a proposal to increase the Real Estate Excise Tax state portion from the current 1.28% level. These bills would significantly increase the rate for properties in excess of $1,000,000 and nearly double the state-rate for properties over $5,000,000.
The Washington Association of REALTORS® has an ambitious agenda to promote greater home ownership, housing affordability, and reducing homelessness.
The campaign is called “Unlock the Door”, and it has several components that help the commercial real estate industry. The first issue is legislation addressing condominium liability. There have been virtually no affordable, market-rate condominium projects developed in recent years. Clarifying developer liability would encourage more multi-use projects.
In addition, legislation enhancing the Multi-Family Tax exemptions for existing projects would add to the housing stock. This proposal would be a huge benefit to commercial real estate investors.
The final issue of concern is making certain proponents don’t pass legislation removing the local ban on rent control. While we were successful defeating this proposal in 2018, the make-up of the 2019 legislature will make this effort more challenging.
We are certain there will be additional policy bills impacting the commercial real estate industry, and we’ll keep you apprised of developments throughout the session. Please mark your calendars for Thursday, January 24 in Olympia and join us for our 2019 Legislative Hill Day. Registration and information can be found at WaRealtor.org.
Bob Mitchell WSCAR Government Affairs Director