TAXATION ‑- REAL PROPERTY ‑- EXEMPTION ‑- ELDERLY ‑- SALE TO NONELIGIBLE GRANTEE ‑- PORTION OF TAX TO BE PAID
Where a person eligible for the real property tax exemption granted for residences owned and occupied by certain senior citizens pursuant to RCW 84.36.370-84.36.380 has timely claimed this exemption and paid his "first half" taxes by April 30 of the year when due as required by RCW 84.56.020 ‑ and then, prior to the due date for the second half payment he sells the property to a noneligible grantee who assumes the obligation to pay the remaining taxes, the grantee will be required to pay one‑half of the original amount levied.
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October 16, 1972
Honorable Lincoln E. Shropshire
Yakima County Court House
Yakima, Washington 98901
Cite as: AGO 1972 No. 23
By a previously acknowledged letter you have requested an opinion of this office in regard to the real property tax exemption granted to certain elderly or retired persons with low incomes under RCW 84.36.370-84.36.380. Your question may be stated as follows:
Where a person eligible for the real property tax exemption granted for residences owned and occupied by certain senior citizens pursuant to RCW 84.36.370-84.36.380 has timely claimed this exemption and paid his "first half" taxes by April 30 of the year when due as required by RCW 84.56.020 ‑ and then, prior to the due date for the second half payment he sells the property to a noneligible grantee who assumes the obligation to pay the remaining taxes, what portion of the original amount levied will the grantee be required to pay?
In our opinion the grantee in this case will be required to pay one‑half of the original amount levied.
[[Orig. Op. Page 2]]
RCW 84.36.370-84.36.380 codify the provisions of §§ 4 and 5, chapter 288, Laws of 1971, 1st Ex. Sess., as amended by §§ 1 and 3, chapter 126, Laws of 1972, 1st Ex. Sess., and provide for an exemption from specified percentages of excess property tax levies1/ in the case of residences owned and occupied by qualified senior citizens. The basis for this legislation is Article VII, § 10 (Amendment 47) to the state Constitution which provides that:
"Notwithstanding the provisions of Article 7, section 1 (Amendment 14) and Article 7, section 2 (Amendment 17), the following tax exemption shall be allowed as to real property:
"The legislature shall have the power, by appropriate legislation, to grant to retired property ownersrelief from the property tax on the real property occupied as a residence by those owners. The legislature may place such restrictions and conditions upon the granting of such relief as it shall deem proper. Such restrictions and conditions may include, but are not limited to, the limiting of the relief to those property owners below a specific level of income and those fulfilling certain minimum residential requirements." (Emphasis supplied.)
RCW 84.36.380 requires claims for this exemption to be filed between January 2 and July 1 of the year in which the property taxes against which the exemption is claimed are levied for collection during the following year. Collection is provided for under RCW 84.56.010, as follows:
". . . the county treasurer shall in no case collect such taxes or issue receipts for the same or enter payment or satisfaction of such taxes upon said assessment rolls before the fifteenth day of February following [the first Monday in January next succeeding the date of levy]."
[[Orig. Op. Page 3]]
Also to be noted is RCW 84.56.020 which provides (in material part) as follows:
". . . All taxes upon real and personal property made payable by the provisions of this title shall be due and payable to the treasurer as aforesaid on or before the thirtieth day of April in each year, after which date they shall become delinquent, and interest at the rate of five percent per annum on not more than five hundred dollars of delinquent taxes on real property for a single year in any county shall be charged and interest at the rate of ten percent per annum shall be charged upon the balance of such unpaid taxes and upon unpaid personal property taxes from the date of delinquency until paid: Provided, That when the total amount of tax on any lot, block or tract of real property payable by one person is ten dollars or more, and if one‑half of such tax be paid on or before the said thirtieth day of April, then the time for payment of the remainder thereof shall be extended and said remainder shall be due and payable on or before the thrity-first day of October following, after which date such remaining one‑half shall become delinquent, and interest at the rate of five percent per annum on not more than five hundred dollars of delinquent taxes for a single year in any county shall be charged and interest at the rate of ten percent per annum shall be charged upon the balance of said remainder from the date of delinquency until paid: . . ."
In AGO 1971 No. 31 [[to Prosecuting Attorney, Skagit County on October 6, 1971]], (copy enclosed) we were asked whether the grantee or heir of a person qualified for the subject exemption succeeds to the benefits thereof when he acquires the property to which it applies at some time after a claim for the exemption has been timely filed but before February 15 of the following year when the taxes against which it operates become due and payable. In responding we noted,interalia, the legislature's expression of purpose for this exemption as set forth in § 11, chapter 281, Laws of 1971, 1st Ex. Sess. (RCW 84.36.125) ‑ as follows:
[[Orig. Op. Page 4]]
"Due to the tremendous rise in living costs during the past decade, including increased property taxes, the failure of federal old age and survivors insurance and similar types of pension systems to adequately reflect in their pension payments these costs, and because savings once deemed adequate for retirement living are now grossly inadequate, it is therefore deemed necessary that the legislature now grant people retired on fixed incomes some relief from real property taxes. This relief must be granted to insure that thousands of persons now retired on fixed incomes can remain in possession of their homes, thus not becoming a burden on state or local government." (Emphasis supplied.)
We then responded to the question presented by saying:
"A reading of the entire act, including this continuing expression of its purpose thus discloses beyond any doubt the intent of the legislature to grant a certain measure of tax relief only to those persons described therein ‑ for whose benefit alone it was enacted. The exemption is intended to be a personal one, afforded only to those able to meet all of the statutory conditions and who file a claim therefor. The act is not designed to be of benefit to the heirs or grantees of the person entitled to the exemption. We conclude, therefore, that the tax exemption granted pursuant to §§ 4 and 5, chapter 288, Laws of 1971, 1st Ex. Sess., does not follow the property to the benefit of the claimant's heirs or grantees."
In addition we advised that:
"Under subsection (2) of § 5, claims for exemption are to be made annually in the year of the levy. The taxes become due and payable the following year and it is then that 'the person' ‑ the one who has qualified and timely filed his claim ‑ is relieved from the 'obligation to pay' all or a portion of [[Orig. Op. Page 5]] any excess levy on his residence. In other words, the act does not, by its terms, exempt or make any property immune from any part of an excess levy. Rather, the property becomes subject to those levies but thereafter, at the time of payment, the qualified claimant is 'exempt from an obligation to pay' such levies in whole or in part."
Although RCW 84.36.370 and 84.36.380 have since been amended by §§ 1 and 3, chapter 126, Laws of 1972, 1st Ex. Sess., these amendments in no way affect the reasoning or the conclusion reached in this prior opinion or their application to the problem you have now raised. Your immediate question, however, differs from the one we there answered in that here the person qualified for the exemption has actually paid the "first half" of the taxes by April 30 of the year when due and has received the benefit of his exemption before selling the property to a noneligible grantee who has agreed to pay the remaining taxes due for that year.2/
We have earlier seen that RCW 84.56.020, under which this situation may arise, permits a person to pay the taxes levied against a parcel of real property in two equal installments without penalty. Its application to a taxpayer who is qualified for the exemption here in question can best be explained by an illustration: Assume that the total tax levied against the residence is $150.00 and that the owner is entitled to an exemption of $50.00. The total tax payable by him for that year is, thus, $100.00. If he elects to pay only the first half by April 30, he actually pays $50.00, receives a credit for one‑half of the exemption and thereby discharges half of the total tax levy of $150.00. He would then owe $50.00 on the remainder and be entitled to the balance of the exemption to satisfy the last half and the total levy for the year of $150.00.
However, repeating what we said in AGO 1971 No. 31, the applicable statutes do not exempt or make the property itself immune from the subject levies. The exemption is a personal [[Orig. Op. Page 6]] one whereby the qualified taxpayer is simply relieved "from any obligation to pay" a portion of the taxes levied against his residence. It is not available to any other person. The property remains subject to the taxes so levied, but upon payment the taxpayer is given credit for the amount of his exemption and he thereby satisfies his obligation to pay these taxes.
From these conclusions it therefore follows in the hypothetical case above stated that if the residence in question is sold to a noneligible grantee after the first half payment is made, this grantee who has assumed the obligation to pay the remainder of the taxes due for that year cannot use the reaminder of the exemption as a credit against these taxes as could his grantor if the property had not been sold. Using the above illustration, the grantee in this case would thus pay $75.00, or one‑half of the original amount levied.
We trust the foregoing will be of assistance to you.
Very truly yours,
HENRY W. WAGER
Assistant Attorney General
*** FOOTNOTES ***
1/Except as provided in RCW 84.36.070 (4).
2/In the absence of an express agreement in such a case the obligation to pay taxes is prorated under the provisions of RCW 84.60.020.