Assessed value

Key Takeaways

• Washington requires all property to be valued at one hundred percent of its true and fair value in money and assessed on the same basis unless a law provides otherwise (RCW 84.40.030).
• Real property in Washington is listed and assessed every year with reference to its value on the first day of January of the year in which it is assessed (RCW 84.40.020).
• Property tax equals assessed value multiplied by the levy rate, so solving for assessed value means dividing the tax by the rate.
• A jump in assessed value does not by itself let a taxing district collect more, because RCW 84.55.010 holds a regular levy to a limit factor of no more than 101 percent of the highest lawful levy plus new construction.

What It Means

Assessed value is the dollar figure a county assessor places on a property so property tax can be calculated. It is set by the taxing authority, not by a buyer, a seller, or a listing broker, and it drives the bill through one formula: tax equals assessed value multiplied by the levy rate. Rearranged, assessed value equals tax divided by rate, which is how the math usually shows up on an exam.

Students mix this number up with two others. Market Value is what a willing buyer and a willing seller would agree to in an open sale. Appraised value is what a lender's appraiser reports so the bank can size the loan, and it is the figure that feeds the Loan To Value Ratio, never the tax figure and never the purchase price. That distinction matters in practice, as any broker who has worked through a low appraisal can confirm. The assessor's number can trail both, because it is fixed once a year and comes out of mass appraisal across thousands of parcels rather than one negotiated sale. Keep the three apart and the math questions get much easier.

How It Works in Washington

Washington is stricter than the national shorthand suggests. RCW 84.40.030 requires that all property be valued at one hundred percent of its true and fair value in money and assessed on the same basis unless specifically provided otherwise by law, so Washington does not apply a fractional assessment ratio the way some states do. RCW 84.40.020 sets the clock: all real property subject to taxation is listed and assessed every year with reference to its value on the first day of January of the year in which it is assessed. Under RCW 84.41.041 the county assessor revalues every parcel each year, adjusting between inspections using statistical data, and reviews and values property characteristics by physical inspection at least once every six years.

Two ceilings keep the bill in check. RCW 84.52.050 provides that the aggregate of all tax levies on real and personal property shall not in any year exceed one percentum of the true and fair value of the property, and RCW 84.55.010 holds each district's regular levy to a limit factor, defined in RCW 84.55.005 as no more than one hundred one percent of the highest lawful levy of the last three years, plus an add-on for new construction. Both limits govern the annual property tax only, so Washington's separate real estate excise tax picture is a different subject. An owner who disagrees with the assessor petitions the county board of equalization under RCW 84.40.038, on or before July 1 of the assessment year, within thirty days after the value notice was mailed, or within a longer county-adopted window of up to sixty days, whichever is later.

Example

Ana owns a house in Spokane County. On January 1 the assessor lists it at a true and fair value of $480,000, and that becomes the assessed value used for the following year's tax. Her combined levy rate works out to $9.50 per $1,000 of assessed value. Running the course formula, $480,000 divided by 1,000 is 480, and 480 multiplied by 9.50 is a tax bill of $4,560. A separate line for Special Assessment Taxes would be added on top if her parcel sat inside a local improvement district.

In April Ana lists the house and it sells for $529,000 after competing offers. That sale price does not change the value already on the assessment roll for January 1. The buyer's lender orders its own appraisal, which comes back at $525,000, and the lender sizes the loan against that. Ana ends the year looking at three numbers for one house: $480,000 for tax, $529,000 as the negotiated price, and $525,000 as the appraised value.

Common Mistakes and Exam Traps

• Assessed value is set by the taxing authority. Market value comes out of a negotiation between a buyer and a seller. Questions swap the two on purpose.
• A lender sizes a loan against the appraised value, not the tax-assessed value and not the purchase price, so a loan-to-value question never uses the assessor's figure.
• Washington assesses at one hundred percent of true and fair value under RCW 84.40.030, so an answer choice that applies a fractional assessment ratio to Washington is wrong even though it is right in some other states.
• In the formula tax equals assessed value multiplied by rate, solving for assessed value means dividing the tax by the rate. Multiplying is the classic wrong turn.