How is property tax in Seattle calculated? 1% of purchase price?

4 Replies

I was talking to a real estate agent and they said my property tax will be based on the assessed value and not the price I bought it for. I thought that my purchase price would automatically be made the assessed value when I make the purchase. Is this not true?

If so, is it ~1% of my purchase price?

I have the same question and would love to know the answer.

From my understanding, it won't happen automatically. I have been checking the assessed value after some properties got sold, nothing would change). Also, there is additional tax on places near the new light rail. I heard you can appeal the assessed value shortly after the new value came out, and you can use the purchase price to appeal to them. I would love to hear other people experience.

Also, the land value and improvement value are very inconsistent, this is super weird to me.

Assessed value and market value (price) can be very different. The way tax assessed value is calculated is over my head. This might help explain. And of course, how your property taxes are calculated varies by municipality. 

I'd kill for 1% of purchase price... here in MI we go (1/2 assessed value x millage rate)/1000. With non-homestead millage rates often ranging 60-80, depending on area, well... can lose 20% of the gross rents right off the top.  

Every state is different in this respect- in WA, a assessor actually estimates the value of your property and this can change, up or down, every year. The purchase price influences that estimate, but the estimate is not set to the purchase price, and the estimate is typically less than fair market value. If you believe your estimate is incorrect, you can always contest it (which I've done in King County successfully, saving thousands of dollars a year)

As another example: in California, the tax value IS set to your purchase price, plus a modest inflation adjustment each year. For this reason, many folks who have owned their homes for 20-30 years in California have a very low tax value, and very low property taxes. This is generally seen as good for fighting against gentrification and allowing seniors to age in place, as your property taxes won't jump up dramatically just because the real estate market is appreciating.

Many here in WA, myself included, believe that some of our income inequality and gentrification problems could be solved by adopting California's model of property taxation. This would require our government to leave money on the table though, something they're not well known for doing :D.