Taxes

• Why do we have property tax?
  

• If assessed value increases, do taxes have to increase?
  

• If assessed values decrease, do property taxes automatically decrease?
  

• Can I appeal the amount of taxes I will pay or the percentage that my assessment increased?
  

• I have a senior citizen or disabled person exemption and my taxable value is "frozen", will the new assessment affect my taxes?
  

• Is it possible to make a "ballpark estimate" of how much the taxes will be on a piece of property that I am thinking about buying (or a structure that I might build)?
  

• How does Washington State rank in terms of property tax collected per household when compared to other states?

Tax Relief Programs

• What tax relief programs are available?
  

• What tax relief programs are available for senior citizens or disabled persons?
  
  

Why do we have property tax? Taxing authorities such as school districts, park districts and city councils adopt their budgets and levy taxes to deliver the services that taxpayers want and authorize. Taxing authorities require money to provide those services. Property taxes are also used to pay for special voter-approved measures such as school maintenance and operation levies and bonds, and emergency medical levies.

If assessed value increases, do taxes have to increase?  No. Raising property values does not increase taxes. Taxing districts' budgets are limited by how much their budgets can increase under the 1% Levy Limit.

For example, let's say a portion of your tax bill is for a city:

• The city taxing authority decides how much money the property tax has to collect that year, say $1 million.
• Assessors estimate the total assessed value (A/V) of all taxable property within the city, say $500 million.
• A tax rate (levy rate) is calculated by dividing the amount of tax to be raised by the total A/V of the city: $1 million/$500 million = $2 per thousand dollars of A/V.
• If your home's assessed value is $100,000, your share of the taxes will be: .002 x $100,000 = $200.
• If the assessed value of property within the city doubles to $1 billion, and the amount to be raised stays the same, the tax rate will be: $1 million/$1 billion = $1 per thousand dollars of A/V.
• Your taxes, if your home doubles in value, will still be $200: .001 x $200,000 = $200.

If assessed values decrease, do property taxes automatically decrease? No, not unless the decrease in assessed value for a taxing district causes the taxing authority to exceed the statutory limit for its regular levy rate. For example, let’s say a portion of your tax bill is for a taxing district:

Example One:
Before values decrease and a taxing district is not at its statutory limit at $2.00 per thousand dollars of assessed value.

• The taxing authority decides how much money the property tax has to collect that year, say $1 million.
• Assessors estimate the total assessed value (A/V) of all taxable property within the district is $1 billion.
• A tax rate (levy rate) is calculated by dividing the amount of tax to be raised by the total A/V of the district: $1 million/$1 billion = $1.00 per thousand dollars of A/V.
• If your home’s assessed taxable value is $100,000, your share of the taxes will be: .001 x $100,000 = $100

Example Two:
Before values decrease and a taxing district is at its statutory limit at $2.00 per thousand dollars of assessed value.

• The taxing authority decides how much money the property tax has to collect that year, say $1 million.
• Assessors estimate the total assessed value (A/V) of all taxable property within the district is $500 million.
• A tax rate (levy rate) is calculated by dividing the amount of tax to be raised by the total A/V of the district: $1 million/$500 million = $2.00 per thousand dollars of A/V.
• If your home’s assessed taxable value is $100,000, your share of the taxes will be: .002 x $100,000 = $200

Example Three:
After values decrease, the calculated levy rate increases to $4.00. The rate is still limited to $2.00 without going to a vote of the people.

• The taxing authority decides how much money the property tax has to collect that year, say $1 million.
• Assessors estimate the total assessed value (A/V) of all taxable property within the district is $250 million. (A 50% reduction in assessed value from example two.)
• A tax rate (levy rate) is calculated by dividing the amount of tax to be raised by the total A/V of the district: $1 million/$250 million = $4.00 per thousand dollars of A/V – which exceeds the $2.00 limit and the district can not collect at $4.00 – only at $2.00. If your home’s assessed taxable value is $50,000, your share of the taxes will be: .002 x $50,000 = $100.
• This districts tax to be collected is reduced to $500,000 instead of $1 million.

Example Four:
After Values decrease and the taxing district’s statutory limit is $3.00.

• The taxing authority decides how much money the property tax has to collect that year, say $1 million.
• Assessors estimate the total assessed value (A/V) of all taxable property within the district is $450 million. (A 10% reduction in assessed value from the previous assessment.)
• 
  A tax rate (levy rate) is calculated by dividing the amount of tax to be raised by the total A/V of the district: $1 million/$450 million = $2.22 per thousand dollars of A/V – which does not exceed the $3.00 limit and the district can collect at $2.22.
• If your home’s assessed taxable value is $90,000, your share of the taxes will be: .00222 x $90,000 = $200.
• The districts tax to be collected is not reduced.

Can I appeal the amount of taxes I will pay or the percentage that my assessment increased?  No. The Board of Equalization cannot consider appeals on this basis. If you have concerns over the amount of taxes you are paying, you need to take them up with the taxing district officials who determine the budgets for their districts. As a taxpayer you may have to decide whether you are willing to do without service or reduced services to keep taxes low. You can also work for efficiency in government by attending budget hearings and calling or writing the taxing authorities with your concerns and ideas. Please refer to your local phonebook for contact names and numbers.

I have a senior citizen or disabled person exemption and my taxable value is "frozen", will the new assessment affect my taxes?  No. Individuals qualifying for a Senior Citizen or Disabled Persons exemption have their taxes calculated on the market value of the property on the date of qualification for the exemption program ("Frozen Value") and not on New Market Value.

Is it possible to make a "ballpark estimate" of how much the taxes will be on a piece of property that I am thinking about buying (or a structure that I might build)?  Yes. The average 2008 tax rate in Snohomish County is about $8.92 per $1000 of assessed valuation. Rates vary from area to area and from year to year, but multiplying the number of thousands of dollars of price or cost by 8.92 will provide a rough estimate of taxes. Tax rates ranged from a low of $7.1097 to a high of $9.6221 depending on where you live in the county.

How does Washington State rank in terms of property tax collected per household when compared to other states? Click here to see rankings of property tax collection per household by state.

What tax relief programs are available?  There are several exemption programs and special classifications available that provide tax relief:

• Open Space Classification for Agricultural land, Timberland, and Natural preserves.
• Designated Forest Land Classification for timberland parcels 20 acres or more.
• Historical Restoration Exemption for historical significant property undergoing restoration.
• Improvement Exemption - Single Family Dwellings a temporary exemption of valuation of additions to single-family dwellings.
• Destroyed Property Claim adjustment to the valuation of destroyed property.
• Property tax exemptions for senior citizens and disabled persons
• Full tax deferrals for senior citizens and disabled persons.
• Exemptions for qualifying property owned by non-profit organizations.
• Property tax deferral for those with limited income.

For further information about any of these exemptions, contact the Exemption Department at (425) 388-3540.

What tax relief programs are available for senior citizens or disabled persons?  If you own and occupy a residence or mobile home, are now or will be 61 or older by December 31 of this year OR are retired because of physical disability you may qualify for an exemption and/or a reduction on next year's property tax. The total combined, gross household income limit (including social security and/or disability payments) is $35,000 or less. For determining eligibility we must use your total combined income, which is your income from ANY source and is not the same as "taxable income" used for federal income tax purposes.

A full tax deferral program (which is separate from the exemption program) is also available for qualifying senior citizens and disabled persons. The total combined, gross household annual income limit for the Senior Citizen/Disabled Persons Deferral program is $40,000. This program creates a lien against your property as you are deferring to the State of Washington to pay your property taxes. The amount the State pays must be re-paid upon the transfer of ownership of your property.