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Home-price dip in 2018 - will it affect my 2019 property-tax bill?

October 4th, 2020 12:02 PM by Sam Kader

Here in Washington state - property taxes are due twice a year - first installment is due on April 30th and second installment is due on October 31st.  Every time we hear a story of property prices are falling - the same question prevails: What does it mean for my property taxes? The short answer is it does not have any immediate impact on your property tax bill. 

What happen in current year is you or your mortgage company (depending whether you have an impound account or not) will receive the first half of your current property tax bill sometime in February. The first thing to know is that county assessors by law peg your tax bill to your home's value determined from about one year ago since they need the full year to go around figuring out the values of all 715,000 parcels in the county. That means the bill you will receive in February of every year will reflect the assessed value of your house as of Jan 1st of the prior year.  So by the time you receive your first installment notice - the property value of your assessed home is about 16 months old.  

Well - how about the following year? Will the softening market reduce tax bill then? Not necessarily (disappointing isn't it?).  According to the Assessor's Office - changing in home values are the least impactful ingredient in the changes to the stew they use to set property bill.  The actual process of how property tax bill is calculated is a bit confusing. Essentially, the assessor calculates how much money each public agency (from cities to schools to fire districts) gets property-tax revenue is due then the county works backward to charge property owners a certain amount based on their property's value to generate the total taxes that each property owner pays. Since Washington state does not have state income taxes - our property tax rates are generally higher than states that do have state income taxes.  

Here's an example of how it works: Let's say a school district is due $100 in property-tax revenue this year. There are two properties in the district - a green house worth $250,000 and a blue house worth $750,000. The owner of the green house which has one-fourth the district's total value pays $25 and the blue house pays $75. The next year, the district would be allowed to charge 1 percent more or in this case the green house would pay an extra 25 cents and the blue house another 75 cents. Should the value of the green house catches up (though renovation or upgrades) and becomes worth the same amount as the blue house then the $100 bill would be split evenly.  The county's appraisers usually come out and visit/drive-by each home once every six years to "reset" the home's value.  Thus, you may notice an especially large bump once every six years.  The other years the assessor relies mostly on nearby sales and market values to determine the assessed value.  

In general, those districts by law are not allowed to raise the revenue they generate by more than 1 percent each year. However, voters and public officials can override that cap with special taxes. For example, the voter-approved Sound Transit expansion in 2017 was  a big reason taxes went up in 2017.  

Should you feel that your property was overly assessed by the county, you can appeal your property-tax assessment - though only one-third is successful. Golden rule for appealing assessments is to consider whether the fair market value is less than what you would sell the house for. For example, the county's value of my house in Seattle has gone many times over the years but so has the actual value - so even though it seems unfair that the property taxes have gone up, I know my house is worth more than they say it is. A real estate agent can help you determine whether the assessment is fair by completing a Competitive Market Analysis or CMA. This can help you assist in your decision to appeal or not.

If homeowners are 61 or better as of Dec. 31 of the previous year who own a home and make less than $40,000 may qualify for an exemption or deferral as do some disabled homeowners.  Please call County Assessor's office at 206-296-3920 to apply. 



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