New Tax Relief: ADU Owners – Are You Eligible for Savings?

In exciting news for ADU homeowners, the Washington state governor recently signed House Bill 2375 into law expanding property tax exemption for seniors and disabled. You might be wondering what that means. We promise—it’s good news! Basically, this new law says that qualified seniors and disabled persons who live in a detached ADU can now receive the same property tax exemption as those in an attached ADU.

This is a significant win and benefit. It offers a great tax break for those who want to be close to family who live in their own home on the same plot of land but want the privacy and freedom that comes from living in their own space.

new tax relief

The Housing Crisis in Washington: Critical Background

Let’s start by stating a fact for Washington residents: The cost of living in this Pacific-Northeast state is 17% higher than the national average. Housing alone is almost 30% higher. And though utilities tend to cost a bit less, these savings are surpassed by the high cost of necessities such as food and clothing.

So, this sets the stage for explaining that it costs a lot to live here. Unfortunately, there is a significant shortage of affordable homes for those in low-income households (ELI). These households live at or below the poverty guideline or 30% of their area median income (AMI). For these households, they are often faced with spending well over 50% of their incomes on housing. The general rule of thumb is to keep your housing costs at 28% or less of your gross income.

This housing shortage tends to create significant strife for qualified seniors and those living with a disability. With a limited or fixed income, it can be challenging to afford a home at an average price of $540,000.

What is an ADU?

So, just what is an ADU, anyway? An ADU, or Accessory Dwelling Unit, is a smaller, independent living space on the same property as a main house. Think of it as a tiny house or a cozy apartment attached to a home or standing alone in the backyard. These units can be great for guests, renting out, or family members who need space but want to stay close.

ADUs come in two main types: attached and detached. Attached ADUs are part of the main house, like a basement or garage, which is turned into a living area. Detached ADUs are separate buildings, like a small cottage in the garden, or a manufactured home for those who want more space. Both types give folks a private place to live, complete with a kitchen, bathroom, and sleeping area.

The cool thing about ADUs is their combination of independence and togetherness. You can have family nearby but still enjoy your own space and privacy. Plus, they can help make living in expensive areas more affordable, especially for seniors and people with disabilities who might have tighter budgets.

In short, ADUs provide extra living space in a smart, flexible way. With the new law, even more people can enjoy the benefits they bring, like saving on taxes and having a cozy, cost-effective home.

The Genesis of House Bill 2375

House Bill 2375 didn’t just come out of nowhere. It started with a real need, spotted by Rep. Keith Goehner, thanks to a chat with one of his constituents. This person was living on a tight budget and helping a family member by providing them a place to stay. They needed a break on property taxes for their detached ADU, just like folks with attached ones get.

Seeing the bigger picture in this single story, Rep. Goehner knew something had to change. “Washington’s got a big problem with finding affordable homes,” he said. The state needed more options for people struggling to afford a place to live. This bill could help by making the tax break rules the same for all ADUs, whether they’re attached to the main house or not.

“Great ideas often come from the people living these experiences,” Goehner remarked. He was proud to see the Legislature step up, making it easier for those tight on money or fighting with high housing costs. Thanks to this action, from June 6, 2024, more people in need can find relief, showing how listening to constituents can spark change and offer a helping hand.

The Broader Benefits of ADUs: Impact on Senior Citizens and Disabled Individuals

ADUs offer a fantastic blend of benefits that particularly resonate with seniors and disabled individuals. One key advantage is the proximity to family members. These small, secondary homes on the same property as a main residence enable older adults and those with disabilities to live near their loved ones.

Beyond just being close to family, ADUs are often designed with accessibility in mind. They can feature wide door openings, spacious showers without steps, and ramps, making them highly suitable for individuals with mobility issues. The single-level layout common to ADUs eliminates the need for stairs, enhancing safety and ease of movement for residents who may find navigating traditional homes challenging.

Another significant benefit of ADUs is their energy efficiency. These smaller living spaces require less energy to heat and cool, resulting in lower utility bills. For seniors and disabled persons who often live on a fixed income, the cost savings from reduced energy consumption can significantly affect their monthly budgets.

Do You Want to Get Ahead of the New Tax Credit?

If you’ve been considering a manufactured home as a detached ADU but have put it off due to the tax disadvantages, now is the great time to reconsider. With the benefit going into place in June 2024, now is the perfect time to start picking your floor plan and options.

At ECM Homes, we’re proud to be a licensed dealer of high-quality upscale Palm Harbor Homes. When you purchase a manufactured home from us, you get to select all of your upgrades, from the foundation to the insulation, roofing, and more. This means your new will be configured to your specifications, creating the forever home you’ll love to live in. Contact us today.