Chapter Fifteen: Property Taxes
Both owners and tenants pay taxes on the properties in which they live and work. Taxes are based on the value of the property, as determined by the
King County Assessor's Office.
In Washington, property taxes are a source of income for the state, counties, cities and other taxing districts (i.e. schools, fire department, etc.) to pay for community services. For this reason, property taxes are taken very seriously. The consequences for not paying them will not only harm you personally, but will leave your community without the necessary resources to operate efficiently.
Key terms you will need to know for this chapter include:
- Assess : To place a value on property for tax purposes.
- Assessment Level: The rate at which property is assessed.
- Assessed Valuation or Value: The result of multiplying a property's fair market value with its assessment level.
- Equalized Assessed Valuation or Value: The result of multiplying the assessed valuation of a property with the equalization factor.
- Equalization Factor:
A factor determined each year by the Washington Department of Revenue to ensure assessments are equal between all counties in the state. This is also
known as the "multiplier."
Levy: The total amount of funds requested by a taxing district.
- Property Tax: The local tax on the value of real property, land, buildings and homes. These taxes are a major revenue source for funding local services such as schools, libraries, health services, public works and parks.
- Tax: A mandatory payment to the government, used to fund services.
- Tax Base: The number of resources (i.e. buildings, parcels of land, etc.) available for taxation.
- Tax Code: The specific geographic area taxed by various taxing bodies/districts (i.e. school district, forest preserve, police, sanitation, etc.)
- Taxing District: Local government agencies authorized to tax property within their geographic boundaries. Examples: school districts, park districts, police and fire departments and municipalities.
Assessing property taxes is a complicated process that begins with the tax assessor and ends with the taxpayer. Various government agencies play
specific roles at each stage. The cycle can be divided into four steps, which we will discuss in the remainder of this section.
Placing an Assessment
Placing an assessment on a property is a multi-step procedure that includes the appeals process.
The assessment procedure begins with establishing land value. Appraisal theory and state law require land to be valued as if vacant. This value is determined by analyzing sales of comparable bare land. The next step is to study sales and market trends of improved (developed or built-on) properties in a selected area. This sales analysis is used to determine total market value based on square footage, year built and other characteristics of the property. From this total value, we subtract the amount determined for land. The balance is allocated to improvements.
Real property valuations are made by the staff of accredited real estate appraisers from the King County Department o f Assessments. The total valuation represents 100% of fair market value. Market value is the amount of money a buyer, willing but not obligated to buy, would pay to a seller willing but not obligated to sell. For residential parcels, fair market value is determined by analyzing recent sales of comparable properties in the same area. Commercial properties also may be appraised using this method or by using the income or cost approach. The appraisal method used will be the one that offers the best evidence of market value.
The Assessor values property on a cyclical basis according to a revaluation plan filed with the state Department of Revenue (external link). At a minimum, real property must be revalued each four years. King County began an annual revaluation program in 1995.
When any change in valuation is made, you will be mailed a Value Change Notice. This notice shows your old and new total values and a division of value between land and improvements. (Improvement refers to buildings, structures or enhancements to bare land.)
Property Tax Valuation Disputes:
If you feel a mistake has been made in valuing your property, contact The King County Department of Assessments at http://info.kingcounty.gov/about/contact/default.aspx . Staff are available to answer questions.
Public Information Hours:
8:30 - 4:30 Monday, Tuesday, Wednesday, Friday
9:30 - 4:30 Thursday
You can also appeal to the King County Board of Equalization/Appeals.
To do this, you must file a completed petition form within 60 days of the mail date on the front of the Value Change Notice you receive or through July
1 of the year before the tax is due, whichever is later. The Board of Equalization/appeals is independent of the Department of Assessments. You must
present proof that the Assessor has erred in the appraisal. The information you present to the board should include sales of comparable properties in
your area. You should also submit other pertinent information that demonstrates the difference between the Assessor's value and the correct value.
If you do not agree with the county board's decision, you may appeal to the State Board of Tax Appeals (external link). You must again present proof that the Assessor has erred in the appraisal.
Assistance may be obtained from the King County Property Tax Advisor.
Information Needed to Appeal
To appeal a valuation to the King County Board of Equalization/appeals, you must show the Assessor has erred in the appraisal. You must clearly show that the assessed value does not reflect market value. The evidence should consist of sales of comparable properties in your area or information on conditions not known to the Assessor.
You must supply adequate documentation to support your claim if your appeal is based on conditions of which the appraisers were not aware -- for example, the land will not percolate or is not suitable for building. You also may request copies of comparable sales information used to value your property.
You do not have to be represented by an attorney to appeal your property assessment.
You may appeal the county board's decision to the Washington Board of Tax Appeals. Like the county board, the state board considers only questions of value. Property owners also can pursue litigation in court.
Questions about appeal procedures can be directed to theKing County Board of Equalization/appeals or the Department of Assessments.
Determining the Amount of Property Tax
The costs of state and local government determine how much property tax will be levied. These include operating costs of schools, city and county government and other taxing districts such as the Port of Seattle, library, hospital, fire and sewer districts. A large part of each property tax dollar goes to pay off bonds for such capital costs as school buildings and other public projects.
Establishing Tax Levies
The state constitution, statutory levy limits set by the legislature and excess levies approved by the voters are used to calculate the total property tax levy. The tax rate on your property is the figure resulting from dividing the dollar amount required for the taxing district by the total value of property within the district and then adding up the rates of the various districts in which your property is located. The assessed value of your property, multiplied by the combined rate, produces a tax amount which is your fair share of the total property tax levy in your area. The King County Treasurer issues tax statements and taxes are paid to the King County Treasury Operations.
Legal Limitations on Property Taxes
There are four restrictions or limits that affect how high property taxes can go. Each is described next.
The 1% constitutional limit: The primary limitation on property taxes was established by the 55th amendment to the Washington State Constitution in 1972. Article 7, Section 2 of the Constitution and RCW 84.52.050 limit the total regular property tax levy to a maximum of $10.00 per $1,000 of the market value of property. Excluded from this $10 limit are levies for ports and public utility districts.
Statutory maximum rates for districts: RCW 84.52.043 establishes maximum levy rates for the various types of taxing districts (the state, counties, cities and towns, fire districts, and the like). In addition, this statute establishes a maximum aggregate rate of $5.90 per $1,000 of assessed value for counties, cities, fire districts, library districts and certain other junior taxing districts. The state levy for support of common schools is not subject to the $5.90 limit, although it is subject to the constitutional $10 limit.
The 101% limit: In 1971, Chapter 84.55 RCW established a limitation on the increase in regular property taxes for taxing districts. The current limitation each year for most districts is 101% of their highest lawful levy since 1985, plus an additional amount to allow for new construction within the district. The 101% limit applies to the total amount of property tax for a taxing district, not to individual properties.
With majority voter approval, districts may raise the 101% limit in order to exercise more levy authority under statutory and constitutional limits.
Excess levies: Most districts can submit propositions for additional property tax levies to a vote of the people. Local school districts have no regular levy authority (although they are allocated funds from the statewide school levy) so they receive a substantial portion of their funding from voter-approved excess levies. Excess levies must be authorized by a 60% majority of the voters, except for school levies which only require a simple majority, and such levies are not subject to any of the limitations described above.
The Assessor uses the taxing district budget request, the total assessed value of the taxing district and the limitations to set the levy rate . Rates are expressed in dollars per every thousand dollars of assessed value.
When Levy Limits are Exceeded
The regular levy for each taxing district is reviewed by county authorities for compliance with the 101% limit, the district's statutory rate limit and the $5.90 and 1% limits before the levy is made. If the statutory or 101% limits are exceeded by an individual district, then their levy is reduced to a lawful amount.
The statutes establish a district hierarchy for rate reductions if the aggregate limits are exceeded and rates are reduced accordingly.
Calculating Your Taxes
You can estimate what your property taxes will be if you know the "assessed value" of your property and the tax levy rate.
For example, if the assessed value of your property is $200,000 and the levy rate is $13 per thousand dollars of value:
200 ($200,000 divided by 1,000)
x LEVY RATE
= $2,600 estimated tax
Paying Your Property Taxes
King County Treasury Operations is responsible for collecting taxes. Contact them at 206-296-0923.
2009 Codes and Levies (.PDF)
2008 Codes and Levies (.PDF)
King County Taxing Districts
2009 King County Taxing Districts Codes and Levies (.PDF, 161KB)
2008 King County Taxing Districts Codes and Levies (.PDF, 280KB)
Resources for Tax Payers
King County has a website dedicated to providing information about taxes and services to tax payers at: http://www.kingcounty.gov/taxes.aspx
Other Tax Information in Washington State:
The primary income for the State of Washington is Retail Sales Tax which if you are selling art, wares, or tickets you will need to collect sales tax. For more information, visit: http://dor.wa.gov/content/FindTaxesAndRates/RetailSalesTax/
If your organization is registered as a non-profit organizations 501C3 there are several tax exemptions which you are eligible, information can be found from the Washington State Department of Revenue at: http://dor.wa.gov/docs/pubs/industspecific/nonprofit.pdf
Additionally, the Shunpike www.shunpike.org helps all kinds of small and mid-sized arts groups better manage the business aspects of art. In doing so, we aim to create a vibrant and diverse local arts community where arts groups of all sizes can thrive.