How is the value of property assessed for tax purposes in your state? Which types of property are subject to tax?
In Washington, property tax is imposed on both real and tangible personal property. Property is assessed at 100% of its true and fair value, which—under the controlling case law—is the market value. While intangible property is exempt from tax, intangible characteristics that contribute to the value of property are explicitly included (84.36.070 RCW).
What is the state property tax rate?
The statutory state property tax rate is $3.60 per $1,000 of equalized assessed value. Although property is statutorily required to be assessed at 100% of its market value, the Washington Department of Revenue (DOR) conducts an equalization study annually to determine the general ratio between assessed and market value by county and converts the statutory rate by county based on the results of its equalization study.
What is the range of local property tax rates levied in your state?
A variety of constitutional and statutory limits on local property tax levies result in the combined state and local tax rates. These generally range from approximately 0.9% to 1.2% of the property’s assessed value.
Exemptions and deductions
What exemptions and deductions are available?
Washington provides a partial exemption to low-income seniors and disabled persons. Property owned by qualifying non-profits engaged in specific statutorily identified activities is exempt. Schools, churches, cemeteries, hospitals, social service agencies, character building organizations, nursing homes, museums, performing arts facilities, and public meeting halls can qualify for a property tax exemption.
What filing requirements and procedures apply?
Qualifying organizations must file an application for a property tax exemption and, after receiving an exemption, must renew it annually.
Real estate transfer tax
How is the transfer of real estate taxed in your state (including tax base, rates, exemptions, and filing formalities)?
Real estate excise tax is imposed on all sales of real property. The statutory definition of a sale includes any transfer of a controlling interest in an entity that owns real property located in Washington. The state tax rate is 1.28%, while localities can also impose tax at an additional rate of up to 0.5%. Thus, the combined tax rate is between 1.28% and 1.78% of the selling price.
For the transfer of a controlling interest, the measure of tax is 100% of the underlying property’s market value even when the interest conveyed is less than 100%. In other words, a sale of a 50.1% interest in an entity that owns Washington property triggers tax on 100% of the value of the land owned by the entity, not the value of the 50.1% interest transferred.
For direct transfers, the tax is reported and paid to the county when the deed is recorded. The county will not accept a deed for recording unless it is accompanied by a real estate excise tax (REET) affidavit and the tax due.
For transfers of controlling interests, the tax is imposed on the seller, who must file a REET affidavit and pay the tax to the DOR within 30 days of the transaction. If the tax is not paid in a timely manner, the DOR can pursue the tax against either the buyer or the seller and can also pursue shareholders of the seller.
Click here to view the full article.