Purchasing a home in the beautiful Pacific Northwest comes with a long list of benefits. Nearness to the water, the mountains, rainforest, and city—all within driving distance—are just a few of the bonuses of Seattle living. When it comes to property tax, however, Washington State has one of the most complex systems, evaluating tax based on a levy—or budget—program. Not sure what to expect when it comes to owning a home in the Emerald City? Here’s everything you need to know about Seattle property tax.
The Basics of Seattle Property Tax
Property tax is a reality nationwide for anyone who owns commercial or residential real estate. In fact, some states even evaluate taxes on personal property as part of their annual property tax revenue.
These taxes are used to pay for state and local public services, such as schools, road maintenance, snow and ice removal, fire departments, and libraries. Every state, county, and district has their own way of determining property tax rates for homes in that area. This makes understanding property taxes challenging as they can vary dramatically from state to state and even from county to county.
One of the only things that all 50 states have in common when it comes to property tax, besides the reason for collecting the taxes in the first place, is the underlying principle of using the assessed value of your property, multiplied by the local tax rate, to determine your taxes owed that year.
Seattle property tax, however, is significantly more complicated. While most property owners across the country will see a correlation between a decrease in home value and a decrease in property taxes, the same cannot be said about Seattle property tax. For example, housing prices in King County (where Seattle resides) dropped 28% between 2008 and 2012, but the average property tax increased 9% during that same period.
Why is Seattle property tax so complex? It comes down to the fact that Washington State uses a budget-based property tax system.
What is a Budget-Based Tax System?
While your Seattle property value does play a role in your property tax bill, it’s role is minor in comparison to other factors.
The driving force behind your Seattle property tax rate is the budget established by the state, county, and local districts. Essentially, every year the assessor establishes how property tax revenue is needed to fund the budget. This is known as the levy. The levy amount is then divided by the total taxable property value for that district in order to calculate a levy rate per $1,000 of assessed property value.
This is where the value of your home comes into play. The fair market value of your home determines what share of the levy you will pay. So even if the levy amount didn’t change from one year to the next, and your home value also stayed the same, your property taxes will likely change. This is because as new homes are built, and as other homes increase or decrease in value, your share of the tax burden is adjusted accordingly.
The amount of the levy on your district depends on several different factors: the state tax allotment, local districts, and special taxes. While districts can only increase property tax revenue by 1% each year—a statewide law—additional taxes can be added through special voter-approved levies.
How Taxes are Allocated
In Washington State, property taxes make up 9.4% of the state’s General Fund. Besides statewide services, counties and local districts (such as library and fire districts) also receive funding from property taxes.
For homeowners in King County, the largest share of their property taxes go toward funding education. This is due to a Washington State bill that increased state funding for schools, as well as the fact that county voters passed a special school levy that will impact the 2020 tax year. An increase in Seattle property tax (above the expected 1%) in 2017 was due to a voter-approved public transportation tax.
Aside from the state and county general funds, other ways in which Seattle property tax is used is for city public services such as water, waste, and recycling; emergency medical services; port funding (since Seattle is a port city); and local hospitals. Your property tax will also include a certain amount for the local school district where your house is located.
Seattle Property Tax Ranking
Washington State currently ranks 29th for median property tax rates by state. The median rate 1.01% of property value, compared to New Jersey, which has the highest rate median of 2.47%.
Seattle property tax, on the other hand, is one of the highest median property taxes in the United States. The median property tax in King County is currently $3,572 per year for a home worth $407,700 (the median home value).
Despite the complicated—and sometimes steep—Seattle property tax, the booming city is still a highly sought destination for homebuyers. Seattle was one of the fastest-growing cities in the US this decade, and continues to see growth in the form of new jobs, visitors, and people moving to the region. And while growth continues, home prices recently dropped, making the Seattle market appealing to new buyers. Perhaps the Seattle property tax can be overlooked, if not for the stunning beauty that surrounds it, then perhaps because Seattle also enjoys the state’s highest median household income, as well as no state income tax, and no vehicle property tax.
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