HB 2027
In CommitteeHouse
Housing/taxes
Increasing the supply of affordable and workforce housing.
This status may be delayed. See Action History below for the latest updates.
How does a bill become law?
- Introduced: The bill is filed and assigned a number.
- Committee: A subject-matter committee holds hearings, takes public testimony, and decides whether to advance the bill.
- Floor Vote: The full chamber (House or Senate) debates and votes on the bill.
- Opposite Chamber: The bill repeats the committee and floor vote process in the other chamber.
- Governor: The Governor reviews the bill and decides whether to sign or veto it.
- Signed: The bill has been signed into law.
AI Analysis
This bill raises state and local taxes on high-value real estate sales to fund affordable housing programs, including permanent supportive housing, housing for people with developmental disabilities, and farmworker housing. It also expands local governments’ ability to impose higher local transfer taxes and adjusts property value thresholds for inflation.
- Imposes a new state-level real estate transfer tax on sellers of high-value residential properties (starting at $3.05 million), with rates of 1%, 2%, or 3% depending on sale price.
- Increases local governments’ authority to impose higher real estate excise taxes—up to 0.60% on high-value properties—starting July 1, 2025.
- Creates three new dedicated state accounts: the developmental disabilities housing and services account, the housing stability account, and expands use of the Washington housing trust fund—primarily for affordable housing, supportive services, and farmworker housing.
- Requires annual adjustments to property value thresholds for tax brackets based on inflation (using the consumer price index for shelter), with rounding to the nearest $1,000.
- Directs new revenue allocations: 40% to housing for people with developmental disabilities, 40% to permanent supportive housing, 10% to housing stability assistance, and 10% to farmworker housing.
Who is affected
- Homebuyers and sellers of luxury homes — Homebuyers and sellers of high-value residential properties (above $3.05 million) will pay an additional state-level transfer tax on top of existing real estate excise tax.
- Local governments (counties and cities) — Counties and cities will gain new or expanded authority to impose higher local real estate transfer taxes on property sales, with revenues dedicated to housing and infrastructure.
- People with developmental disabilities — People with developmental disabilities and their families will benefit from new dedicated funding for permanent housing and support services.
- Low- and fixed-income households — Low-income, extremely low-income, and fixed-income households—including seniors, veterans, people with disabilities, and farmworkers—may benefit from increased funding for affordable housing, rental assistance, and supportive services.
- Farmworkers — Farmworkers will receive dedicated funding for housing programs through the Washington housing trust fund.
Pro/Con Analysis
Stronger case for benefits
Potential Benefits (5)
The bill dedicates $200M+ annually (per fiscal impact estimate) to permanent supportive housing, housing for people with developmental disabilities, and farmworker housing—directly expanding access to stable, affordable housing for some of Washington’s most vulnerable residents, including seniors, people with disabilities, and low-wage workers.
HousingPeopleRef: Sec. 3(3), Sec. 4, Sec. 5Annual inflation adjustments to property value thresholds (using CPI for shelter) help maintain progressivity over time, ensuring the tax continues to target high-value properties as real estate values rise—protecting middle-class homeowners from creeping tax liability while preserving revenue for housing programs.
HousingPeopleRef: Sec. 2(2), Sec. 3(2)Expanding local authority to impose higher transfer taxes (up to 0.60% on high-value properties) gives counties and cities more flexible, locally controlled revenue to fund housing and infrastructure—especially valuable for high-cost urban jurisdictions where local funding gaps are largest.
Local GovernmentPeopleRef: Sec. 7(1)(iv), Sec. 9(1)(iv)Dedicated 10% allocation to farmworker housing through the Washington Housing Trust Fund directly addresses a critical, historically underserved need—supporting housing stability for a frontline agricultural workforce that often lives in substandard or overcrowded conditions.
HousingPeopleRef: Sec. 3(3)(d), Sec. 5By increasing funding for permanent supportive housing and housing stability assistance, the bill supports a public health approach to homelessness—reducing emergency room visits, incarceration rates, and calls for crisis response, thereby improving public safety and reducing long-term state costs.
Public SafetyPeopleRef: Sec. 2(1)(b)(iv), Sec. 3(1)(a)
Potential Concerns (4)
The new state-level real estate transfer tax on homes above $3.05 million (1–3% depending on price) increases transaction costs for high-value sellers, which may reduce demand for luxury homes and suppress prices in that segment—potentially reducing wealth accumulation for high-net-worth homeowners and investors.
FinancialIndustryRef: Sec. 2(1)(b)(iv), Sec. 3(1)(a)While local governments gain authority to raise higher transfer taxes on high-value properties, the tax structure is complex and may create administrative burdens for smaller counties, especially in rural areas where fewer high-value transactions occur—potentially distorting local revenue planning and creating disparities in capacity to fund services.
Local GovernmentIndustryRef: Sec. 7(1)(iv), Sec. 9(1)(iv)The inflation adjustment for property value thresholds (CPI for shelter) may lag behind actual housing cost inflation, especially in high-growth markets, reducing the real progressivity of the tax over time and limiting revenue growth for affordable housing—thus weakening long-term effectiveness.
HousingLean industryRef: Sec. 2(1)(b)(i)–(iv), Sec. 2(2)The 25-year “use restriction” requirement for grants/forgivable loans (Sec. 4(2)(a)(i)) may discourage private developers and nonprofits from participating due to long-term compliance burdens and limited flexibility to adapt to changing community needs—potentially slowing project delivery despite dedicated funding.
HousingLean industryRef: Sec. 3(3)(a), Sec. 4
Who Is Most Affected
Homebuyers and sellers of homes above $3M face higher transaction costs, which may reduce demand and suppress luxury home prices—potentially reducing wealth accumulation for high-net-worth households and investors, but also reducing speculative investment that drives up housing costs broadly.
Local governments gain new authority to raise revenue on high-value properties, but must navigate complex new tax structures and may face administrative burdens—especially smaller/rural counties with fewer high-value transactions. Urban counties with high housing costs stand to gain the most revenue.
People with developmental disabilities and their families benefit from dedicated, long-term funding for permanent housing and support services—addressing a severe, long-standing gap in state services. However, waitlists may persist due to limited supply and strict eligibility.
Low- and fixed-income households—including seniors, veterans, and people with disabilities—gain access to expanded rental assistance, supportive services, and permanent supportive housing. However, benefits depend on program capacity and local implementation, and may not reach all eligible households quickly.
Farmworkers receive dedicated housing funding through the state Housing Trust Fund, directly addressing chronic housing insecurity in agricultural communities. However, the $10% allocation may be insufficient to meet full sector needs without additional funding.