Assessment

Key Takeaways

• An assessment is the county assessor's official valuation of a property, and it is the figure the annual property tax is calculated from.
• In Washington all property must be valued at one hundred percent of its true and fair value in money and assessed on the same basis unless a law says otherwise (RCW 84.40.030).
• Washington values real property with reference to what it was worth on the first day of January of the assessment year (RCW 84.40.020).
• A special assessment is a different charge: a levy on the properties in a local improvement district, apportioned in accordance with the special benefit the improvement confers on each parcel (RCW 35.44.010).

What It Means

Assessment carries two meanings in Washington real estate, and mixing them costs points on the exam and money at closing. The first is the property tax sense: an assessment is the official valuation the county assessor places on a parcel, and the Assessed Value it produces is what the annual Ad Valorem Tax is calculated from. The assessor values the property; the assessor does not set the tax bill. Taxing districts set levy rates, stated in dollars per $1,000 of assessed value, and the bill is the rate applied to the assessed value.

The second meaning is a special assessment, a charge levied on specific properties to pay for a public improvement that benefits them, such as a new sidewalk, a sewer line, or street lighting. A special assessment is not based on value the way the general property tax is. It is apportioned by the benefit the improvement confers on each parcel. Owners associations use the same word for the dues and one time charges a condominium or homeowners association levies on its members, which is a private obligation rather than a public one.

How It Works in Washington

Washington's valuation standard is statutory: all property must 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 (RCW 84.40.030). True and fair value means market value, and the same section directs the assessor to consider sales of the property being appraised or similar properties within the past five years, along with zoning and other governmental policies affecting how the land may be used.

Timing and frequency are statutory too. Real property 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), and under RCW 84.41.030 all taxable real property in a county must be revalued annually while being physically inspected at least once every six years. An assessed value can therefore change in a year when nobody visited the property.

An owner who disagrees petitions the county Board Of Equalization on or before July 1 of the assessment year, within thirty days after the value change notice was mailed, or within a longer limit of up to sixty days if the county legislative authority adopted one, whichever is later (RCW 84.40.038). Special assessments run on a separate track. Within a local improvement district the cost shall be assessed upon all the property in accordance with the special benefits conferred thereon (RCW 35.44.010), which is how Special Assessment Taxes can land on a parcel whose market value never moved.

Example

Elena owns a house in a Washington county. The assessor's notice sets her assessed value at $520,000 as of January 1. The combined levy rate for her taxing districts is $9.20 per $1,000 of assessed value, so her general property tax for the year is 520 times $9.20, which is $4,784.

That summer the city forms a local improvement district to replace the sidewalks and the street lighting on her block. Elena's parcel is assessed $7,200 for the special benefit, payable over ten years at $720 a year plus interest. Her obligation that year is $4,784 of general property tax plus $720 of special assessment, or $5,504. When she lists the house two years later, the unpaid balance of the special assessment appears on the preliminary title report and is negotiated as a payoff or an assumption at closing, even though it never showed up anywhere in the assessor's $520,000 value.

Common Mistakes and Exam Traps

• Assessed value and market value are not automatically the same number, but Washington's standard is assessment at one hundred percent of true and fair value, so the assessor is aiming at market value (RCW 84.40.030).
• The assessor values property and the taxing districts set the levy rates. An owner who thinks the tax is too high appeals the value to the board of equalization, not the rate.
• A special assessment is charged for the benefit an improvement confers on a parcel, not for what the parcel is worth, so two houses on the same block can owe identical special assessments while owing very different property taxes.
• Washington revalues all taxable real property annually but physically inspects it only once every six years, so a value can rise in a year when no inspector came to the door (RCW 84.41.030).