TAXATION - EXEMPTION - ELIGIBILITY OF LIFE TENANT FOR TAX EXEMPTION UNDER CHAPTER 168, LAWS OF 1965, EX. SESS.

TAXATION - EXEMPTION - ELIGIBILITY OF LIFE TENANT FOR TAX EXEMPTION UNDER CHAPTER 168, LAWS OF 1965, EX. SESS.

Under the existing legislative implementation of Amendment 47 to the state constitution, a life tenant (i.e., one who holds only a life estate) in residential real property does not have a legally sufficient interest in the property to qualify for an exemption from the first fifty dollars of real property taxes due and payable as to such property.

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                                                                  March 22, 1967

Honorable Arthur R. Eggers
Prosecuting Attorney
Walla Walla County
407 Drumheller Building
Walla Walla, Washington

                                                                                                                 Cite as:  AGO 1967 No. 11

Dear Sir:

            By letter previously acknowledged, you have requested an opinion of this office on a question which we paraphrase as follows:

            Under the existing legislative implementation of Amendment 47 to the state constitution (H.J.R. No. 7) is a life tenant (i.e., one who holds only a life estate) in residential real property, if otherwise qualified, entitled to an exemption from the first fifty dollars of real property taxes due and payable as to such property?

            We answer your question in the negative for the reasons set forth in our analysis.

                                                                     ANALYSIS

            Preliminarily, it would be helpful to examine the provisions of the 47th Amendment to the state constitution, which constitutes authorization for the legislature to grant real property tax exemptions such as those provided for by chapter 168, Laws of 1965, Ex. Sess.  This constitutional amendment reads as follows:

             [[Orig. Op. Page 2]]

            "The legislature shall have the power, by appropriate legislation, to grant to retired property owners relief 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."1/

             It should be noted that under this amendment the power of the legislature is limited to granting the property tax relief to "retired property owners," and that the relief can be granted only for "real property occupied as a residence by those owners."

            In implementation of this constitutional provision, chapter 168, Laws of 1965, Ex. Sess., was enacted.  The key provision of this chapter is § 2 (now codified as RCW 84.36.126) which reads as follows:

            "The following persons, as heads of households, shall be exempt from the first fifty dollars of real property taxes due and payable in any one year, provided they come within the following provisions:

            "(1) A male head of a household shall be sixty-five years of age or older prior to February 15th of the year in which the real property is assessed and the taxes levied thereon;

            "(2) A female head of a household shall be sixty-two years of age or older prior to February 15th of the year in which the real property is assessed and the taxes levied thereon;

             [[Orig. Op. Page 3]]

            "(3) The person claiming exemption shall have owned, either in fee or by contract purchase, the real property for which the exemption is claimed for at least five years or have been a resident of the state of Washington for at least ten years if not qualified under the five year ownership limitation;

            "(4) A claim for exemption can only be made for a single family dwelling;

            "(5) Said single family dwelling as provided in subsection (4) above cannot be permanently occupied by anyone who is not solely dependent upon the head of the household for his support;

            "(6) The head of the household and spouse shall be retired from all gainful employment for at least one year prior to application for such exemption and shall not be actively engaged in any type of business;

            "(7) The combined income of the head of the household and his spouse, from all sources whatsoever, shall not be in excess of three thousand dollars ($3,000) for the calendar year immediately preceding the year in which the real property is assessed and the taxes levied thereon.

            "(8) All claims for exemption shall be made and signed either before a notary public or the county assessor or his deputy in the county where the real property is located.  Any person signing a false claim shall be subject to either civil or criminal perjury;

            "(9) Claims for exemption shall be made annually and solely upon forms as prescribed by the Washington State Association of County Assessors.

            "Head of a household, as used in this section, may be any of the following: A  [[Orig. Op. Page 4]] married person, a single person, a widow or widower, a divorce or divorcee, provided they are the sole support of the household."

            So far as your question is concerned, subsection (3) of this provision is of particular importance.  This subsection lays down two alternative qualifications, or conditions, at least one of which must be met in order that the exemption may be claimed.  The first qualification or condition is that the person claiming the tax exemption shall have ownedin fee or by contract purchase the real property for which the exemption is claimed for at least five years.  If not qualified under this five year ownership limitation, the applicant (of necessity, by virtue of the constitution, a retired property owner) must have been a resident of the state for at least ten years.

            Notably, the pertinent subsection sets out two types of ownership which will qualify a person for purposes of claiming the exemption.  Neither of these tests would be met, in our opinion, by a person whose only interest in the real property involved is that of a life tenant.

            A fee interest is defined as follows:

            "An estate of inheritance without condition, belonging to the owner, and alienable by him or transmissible to his heirs absolutely and simply, and is an absolute estate in perpetuity and the largest possible estate a man can have, being, in fact, allodial in its nature.  Stanton v. Sullivan, 63 R.I. 216, 7 A.2d 696, 698, 699.

            "Every estate which is not for life, for years or at will.  Chance v. Weston, 96 Ore. 390, 190 P. 155, 157."  Black's Law Dictionary, Fourth Edition (1951).

            Clearly, a life interest is not equivalent to a fee interest.  Likewise, we believe that the requirement of ownership "by contract purchase" would not be satisfied by the interest of one who has merely a life tenancy.  We believe that the statutory provision here clearly contemplates that which is being purchased by contract is the property itself, i.e., a fee interest, and not merely a life interest in the property.  Thus, we conclude that the holder of a life estate cannot meet the first alternative qualification stated in subsection (3),supra.

             [[Orig. Op. Page 5]]