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Property Tax Exemption & Deferral Programs
The 1889 state constitution recognized that to be effective, uniformity must apply to both assessments and tax rates. Through every subsequent amendment, uniform assessment has remained a constitutional requirement. In 1973 the Legislature mandated that property be assessed at 100% of its market value beginning with the 1975 assessments. Up until the 1930's, property tax was the only major tax that supported most state and local government programs. Today, property tax accounts for about 30% of total state and local taxes. It continues to be the most important revenue source for public schools, fire protection, library, park and recreation, and other special purpose districts.
Washington state law requires assessors to value property at 100% of its true and fair market value in money, according to the highest and best use of the property. The property tax is imposed on the assessed value of the property. All real and personal property is subject to tax unless specifically exempted by law. Certain qualified lands (agricultural, open space, and timber lands) may be valued and assessed on the basis of their current use, which may be less than their highest and best use. Application must be made for current use classification.
- What is market value?
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A simple definition of market value is the most probable price real estate should bring when offered for sale by a person who is willing but not obligated to sell it, and is bought by a person who is willing to purchase it but is not forced to do so.
- What types of properties are assessed?
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Taxable property is divided into real and personal property. Real and personal property are taxed at the same rate.
Real Property includes land, improvements attached to the land, and all rights inherent in ownership. Real property is valued in compliance with state law using accepted mass appraisal principles.
Personal Property includes any property that is not real property, that is, not permanently fixed to or a part of real estate. Machinery, equipment, furniture, fixtures and supplies associated with commercial, industrial or agricultural enterprises are assessed and taxed as personal property. Business inventories, household goods and personal effects are exempt from the property tax.
- How is real property appraised?
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The Assessor values real property using one or more of the three professional appraisal methods:
- Market or Sales Comparison Approach uses sales to provide estimates of value for similar properties which have recently been sold. Most residential property is valued using the market or sales comparison method. An individual sale does not automatically establish the value of the property. Multiple sales of comparable properties are used in establishing value.
- Cost Approach estimates what it would cost to replace an existing structure with a similar one that serves the same purpose, less depreciation. Cost value is added with the estimated land value to get total assessed value. The cost method is most reliable in new construction valuation.
- Income Capitalization Approach is the process of estimating the value of an income-producing property by capitalization of the annual net operating income expected to be produced by the property during its remaining economic life.
(All approaches to value which apply to a particular property may be used by the appraiser.)
- How is personal property valued?
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Everyone who uses personal property in a business must complete a personal property affidavit by April 30 each year. The affidavit lists the taxable property by category, its cost and acquisition date. The assessor uses the affidavit to value property for taxes due the following year. The Washington State Department of Revenue and county assessor conducts ongoing audits on personal property accounts throughout the county.
- How often does Clallam County appraise property?
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Clallam County is on a six-year physical revaluation cycle. Each year, all of the properties in 1/6th of the county are physically inspected, while sales activities are monitored for the remaining 5/6ths of the county using computer assisted market analysis. Assessed values are adjusted upward or downward to market when necessary based on this annual analysis.
- Do I have to let the county appraiser into my home or onto my property?
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No, it is not generally necessary for an appraiser to inspect the interior of a home that has been previously appraised. You may, however, wish to review your property record with the appraiser to update the current condition of your property as well as check for errors in the data (such as number of bathrooms, etc.).
RCW 84.41.040 requires the physical examination of all taxable real property to obtain adequate data on which to base accurate valuations. If access is denied, the appraiser must estimate the value using whatever information he or she has available, and the value derived from that estimate will remain on the tax rolls until a physical examination of the property is permitted.
- Why may assessed values change from year to year?
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When market value changes, so does assessed value. The assessor's staff strives to establish your assessed value as closely as possible to market value. This means your property is valued for what it would sell for as of January 1st of the current year, based on comparable sales, not necessarily what you paid for it. For example, if you buy an older home and fix it up or add a garage to your home, the assessed value would increase. However, if your property is in poor repair, the assessed value would decrease. The assessor cannot falsely create market value....buyers and sellers create market value as a result of their transactions in the market place. The assessor has the legal responsibility to study those transactions and estimate the value of your property accordingly.
- Who determines the amount of a property tax bill?
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Two things determine the amount of your property tax bill:
- The tax rates of the taxing jurisdictions in which your property is located.
- The property's assessed value. The tax rate is determined by the amount of the tax levy to be raised from all, or part, of a taxing district and the district's taxable assessed value. The assessment is determined by the assessor and is based on the estimated market value of your property less any applicable property tax exemptions.
Each year after the total assessed value is set, the assessor calculates tax rates based on taxing district budget requests which are regulated by statutory limits. Each taxing district in the county sends its approved budget to the assessor. The assessor uses the budget request and the total value of all taxable properties in the district to calculate a tax rate.
The rate is expressed in dollars per each thousand dollars of property value. The tax rate of each district is combined with the rates of other districts to get the total rate. From this the assessor can easily determine the total tax you owe for support of schools, special service districts, and local governments.
- What is a property tax levy?
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A property tax levy is the total amount of money to be raised from the property tax, as set forth in the budget for the local government or tax jurisdiction. The cost of providing public services determines your property tax. Local government consists of various taxing districts including fire districts, regional library, cities, county government, roads, hospitals, and ports. This levy, whether higher or lower than the preceding year, is determined by the budget-making authority of the local government. A portion of the tax is distributed to the state for local school support. In addition, taxes are collected to pay for special voter-approved levies, such as school maintenance and operation levies and bonds and emergency medical levies. The levy rate (or tax rate) is expressed as dollars per $1000 of assessed value.
- Why do property tax rates vary throughout the county?
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The amount of property tax due on similar properties may be different throughout a county. There are three reasons for these differences:
- The various combination of taxing districts in different areas of the county.
- The presence of voter-approved special levies and bonds.
- The amount of the budget for each taxing district.
- How do I pay my property taxes?
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Please see the Treasurer Home Page.
- What if I disagree with my property's assessed value?
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Given the fact that we value thousands of properties each year and that our values are the basis for a tax, it is inevitable that there will be some disagreements. You may contact the assessor's office to review your valuation any time you have a question about your property value. Property owners can often settle disagreements at this level without filing a formal appeal. If you are not satisfied, you may file a written appeal with the Clallam County Board of Equalization located at the Clallam County Courthouse, 223 East 4th Street, Suite 18, Port Angeles, WA 98362. Appeal forms are available at both the Assessor's Office, the County Board of Equalization, and on both department's websites.
The completed petition must be filed by July 1 of the assessment year or within 30 days of the date the change of value notice was mailed. Your Valuation Change Notice will indicate a specific deadline date for appeal. The County Board of Equalization is appointed by the Commissioners to determine questions of market value. It does not consider taxes. Should you have more questions about the appeals process, you may call the Assessor's office at 360-417-2204 and request a Taxpayer's Guide to Appealing Property Assessments.
Washington state law strictly controls the amount that local districts may increase their total property tax revenues. Property tax limitations are restrictions that affect how high property tax rates can go. These limits apply to the taxing district as a whole, not to individual parcels of property. The Assessor assures that taxing district budget requests comply with these limitations.
1% Constitutional Limit
Washington's State constitution limits the regular (non-voter approved) levies combined property tax rate to 1% ($10 per $1,000) of assessed valuation. This limit applies to the total tax on any individual parcel of property, but this limit does not include regular levies by port districts and public utility districts. Port districts' and public utility districts' regular levies are each limited separately by statute to $0.45 per $1,000 of assessed value. Voter-approved special (excess) levies such as school maintenance and operation and capital projects and bond levies for various districts are not included and are over and above the 1% constitutional limit.
Initiative 747 (I-747)
The passage of this initiative in the November 2001 election applies only to property tax levies, and has no bearing on annual increases or decreases in assessed valuation.
I-747 affects taxes to be collected in 2002, and future years. Prior to I-747, taxing districts were allowed an increase of up to 6 % on the regular levy portion of your property tax. Beginning with the 2002 tax collection, I-747 limits that increase to 1%.
I-747:
- Does not cap the value of your property's assessed valuation. Your property's value is adjusted upward (or downward) annually when necessary based on recent sales of similar properties. If the assessed value of your property increases, your property taxes will also generally increase. Likewise, if your property's value decreases, your property taxes will generally decrease.
- Does not affect or limit levy or bond issues that are voter-approved.
You can estimate what your property taxes will be if you know the assessed value of your property and tax levy. For example, if the assessed value of your property is $100,000, and the levy is $12.50 per thousand dollars of value:
- $100,000 × 0.0125 ($12.50 per thousand) = $1,250 estimated tax
State law requires that citizens be allowed to participate in the budget making process. If you're interested in the amount of money your city, county, school district or special service district must raise from property taxes, you should plan to attend meetings of the district budget committees. At public meetings committee members listen to arguments for and against additional or improved services. If it is decided that a new service or improvement is a good one, they include it in a budget that is recommended to the governing body. The governing body is composed of men and women elected or appointed to be responsible for the operations of the district. The governing body must approve the budget.
Current Use Classification
For commercial agricultural lands and open space lands. Qualifying land owners may apply to classify their land under one or more of these programs. A current use assessment is a reduced assessment for the duration of the classification. There are penalties and interest charges for non-compliance removal as well as voluntary removal from these current use tax relief programs. Contact the Assessor's office for information and applications. The application must be submitted by December 31 for approval of classification or reclassification in the following year.
- Forest Land: for classification for parcels that are greater than 5 acres and are devoted to the growth and harvest of timber.
- Historical Restoration Exemption: for historically significant property undergoing restoration.
- Destroyed Property Claim Adjustment: for adjustment to the valuation of destroyed or damaged property.
30% Home Improvement Exemption
For a three-year exemption from taxes on the value of the remodel, addition, decks patios, garages, or other structural improvements. Physical improvements do not include normal maintenance items. An application for the exemption must be filed with the assessor prior to completion of the project and the property must be the owner's primary residence.
Senior Citizens or Disabled Persons
If you are 61 or older on December 31 of the filing year (no age requirement for disabled persons). You must be the owner and occupant of a single family dwelling, mobile home, or one unit in multiple-unit housing and have a combined disposable income of $46,000 or less (including income of spouse and co-tenant). Your household income determines the amount of the exemption from regular property taxes or excess levies. Updated income levels reflect a legislative change beginning with 2023 income for 2024 taxes.
| Income | Regular Levy Value Reduction | Additional Excess Levy Relief |
|---|---|---|
| $40,001 to $46,000 | None | Exempt from 100% of excess levies |
| $33,001 to $40,000 | Greater of $50,000 or 35% of value but not more than $70,000 | Exempt from 100% of excess levies |
| Under $33,000 | Greater of $60,000 or 60% of Value | Exempt from 100% of excess levies |
Taxpayers will receive a change of assessment notice with a frozen maximum taxable value and a fair market value. These taxpayers will not pay on a value higher than this frozen value as long as they are in this tax relief program. This value will stay the same, unless new construction is added or the home is remodeled. Fair market values may exceed frozen values with no effect on taxes. If market values decline below the frozen value, the taxpayer will pay on the lower of the two values. State law requires the county assessor to audit the income and residence requirements of all recipients of this program at least once every four years.
Full Tax Deferrals for Senior Citizens or Disabled Persons
If you are a senior citizen at least 60 years of age, or a person retired because of physical disabilities at any age, whose income is below $49,239, you may defer property taxes and special assessments in a total amount up to 80% of the equity in your home. Unlike the senior citizens and disabled person exemption program, deferred taxes are a lien on the property. This lien becomes payable, together with interest, upon sale, transfer, or inheritance of the property.
Qualifying Property Owned by Non-Profit Organizations
Many non-profit agencies do not pay a property tax when the property is used for a tax exempt purpose. The Department of Revenue determines which properties are entitled to the exemption based on laws set by the Legislature. Applications for this exemption are available at your assessor's office.
Current state law requires assessors to value all taxable property at 100% of its true and fair market value in money, according to the highest best use of the property. All real and personal property is subject to tax unless specifically exempted by law. State law does not look at a property owner's ability to pay. If a property in a particular area consistently sells for more or less than the assessed value, assessed values must be adjusted to reflect real estate market conditions in that area. Any changes to the current state law in the nature of property tax reform must be initiated by our voters or state legislators.
Since 1997, several property tax measures have been passed by our voters and ultimately thrown out by the Washington State Supreme Court for the reason that they violated the state's constitutional mandate that all properties be taxed uniformly. In November 2001, our voters passed Initiative 747 (I-747 ). I-747 limits the ability of taxing districts to increase their budgets beyond 1% in any one year....(please refer to the Property Tax Limitation section for more detail on this initiative)
To a significant degree, the well being of local government and the taxpayers it serves depends on the thoroughness and evenhandedness with which the duties of the assessor are discharged. Through sound, diligent and effective management practices, the assessor can assure optimum services to county citizens and government, while providing fair and equitable taxation.
Washington State law requires the tax we pay to be based on 100% true and fair market value in terms of money, according to the highest and best use of the property. The taxing districts - through elected or appointed representatives - determine the amount of property tax money considered necessary to provide services.