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Bill to expand REIT exemption to community land trusts draws support from affordable‑housing advocates
Summary
House Bill 2227 would expand an existing real‑estate excise tax (REIT) exemption for sales by affordable homeownership facilitators to include nonprofit programs such as community land trusts; proponents said the change lowers transaction costs and preserves long‑term affordability for income‑qualified buyers.
The House Finance Committee heard from staff and multiple community land trust representatives Jan. 27 about House Bill 2227, a proposal to expand the real estate excise tax (REIT) exemption that currently applies to certain self‑help homeownership sales so it also covers qualified affordable ownership housing sold by nonprofit homeownership facilitators.
Serena Dolly, staff to the committee, explained the existing REIT framework and said HB 2227 would extend the exemption to sales where the seller is an affordable homeownership facilitator (a nonprofit) and the purchaser is income‑qualified (at or below 80% of area median income). The staff fiscal note cited a modest estimated impact on the State General Fund (approximately $12,000 in the current biennium and $27,000 in the 2027–29 biennium).
Rep. Alex Ramel (prime sponsor) described his experience as a community land trust homeowner and told members that the bill would make the transaction cost of the initial sale lower for buyers in community land trusts and similar programs. Multiple nonprofit land trust leaders — including representatives from Homestead Community Land Trust, Colschen Community Land Trust, Proud Ground and Methow Housing Trust — provided examples of households served, the number of affordable homes preserved and the outsized effect closing‑cost savings can have on long‑term affordability.
Witnesses stressed that the exemption applies to initial sales from the nonprofit to a qualifying buyer and does not extend to subsequent market resales. Testimony noted that many community land trusts rely on modest program resources and that exempting these initial sales would stretch limited public and nonprofit dollars further.
Committee members asked clarifying questions about resale rules and income thresholds; staff confirmed the exemption applies to the sale from the nonprofit to a purchaser at or below 80% AMI and does not apply to subsequent resales.
