Legislative updates to the administration of the property tax exemption for property owned by a qualifying social service organization

Intended audience: Nonprofit Social Service Organizations, County assessors, State and local governments, federally recognized Tribes in Washington.

The 2025 Legislature passed House Bill 1094 (HB 1094), which modifies the loan and rental criteria for the property tax exemption available for property owned by a qualifying social service organization. The bill is effective July 25, 2025.

What the bill does

This bill amends RCW 84.36.030 to exempt property that is owned by a qualifying social service organization and loaned or rented to a government entity, or another social service organization that provides qualifying social services. 

Which social service organizations can loan or rent their property?

• Nonprofit social service organizations whose property is currently exempt from property taxes under RCW 84.36.030(1).
• Nonprofit social service organizations whose property would be exempt if qualifying services were provided by the nonprofit, rather than the lessee. 

Which government entities and other nonprofit organizations may qualify for a property tax exemption when they loan or rent exempt property from a qualifying social service organization?

• Federal, state, and local governments.
• Federally recognized Tribes located in Washington.
• Nonprofit social service organizations as described in RCW 84.36.030(1)(a). 

Question & Answers (Q&A)

Q. My organization plans to conduct our social service activities in property leased from a social service organization whose property is exempt under RCW 84.36.030(1). How do we apply for the property tax exemption authorized by HB 1094? Should our organization submit an application for property tax exemption, or should the owning organization submit it? 

A. The organization using the property must submit an application to determine exemption eligibility. You can apply for the property tax exemption by completing an initial Application for Property Tax Exemption. You may submit the completed application along with any additional required documents in one of the following ways:

• Scan and email the application to DORNonprofitApplication@DOR.WA.GOV or
• Mail the application to:
  
  Department of Revenue
  Property Tax Division/Exempt Property
  PO Box 47471
  Olympia WA 98504-7471

Q. Our organization has been leasing from a nonprofit social service organization since 2020. Can our organization qualify for exemption retroactively?

A. No. HB 1094 is not retroactive and applies to taxes levied for collection in 2026 and thereafter.

Q. Are there any tax penalties or implications when the exemption ends? Our social service organization plans to lease property from another social service organization from 2026 through 2031. When our organization ceases operation, does the property become taxable and subject to the additional taxes under RCW 84.36.810?

A. It depends. Back taxes must be collected when exempt use ceases and the property was not exempt from property taxes for more than 10 years, unless the property meets one of the specific exceptions. (RCW 84.36.810). Common exceptions include:

• Transfer to a nonprofit organization, association, or corporation for a use which also qualifies and is granted exemption under 84.36 RCW.
• Relocation of the activity and use to another location or site within Washington.
• Cancellation of a lease on property that had been exempt under 84.36 RCW. 

Questions?

Please visit our property tax page or call 360-534-1400.