"I'm proud to pay taxes in the United States; the only thing is, I could be just as proud for half the money." - Arthur Godfrey
If you're a homeowner in Washington state, you know that property taxes can be a significant expense, especially in the best neighborhoods with even better schools. However, there are several ways to reduce your property taxes and potentially save you money. We've linked pages about deferrals, exemptions, and research specific to King County, but these tips work well across the state - just look up your own county's tax assessor.
Here's our quick overview and a couple top tips to help!
Appeal your property assessment
Your property taxes are based on the assessed value of your home, so if your assessment is too high, your taxes will be too high as well.
The first step is finding your property tax bill online at the King County tax assessors page. You can search for your property using your property address or parcel number. Review the home information there and check for errors. Sometimes, property tax bills contain information that is incorrect and can lead to overpaying. Review your bill carefully and double-check that all the information is accurate. If you find an error, contact your county assessor's office to have it corrected.
Take advantage of exemptions and credits
Washington state offers several exemptions and credits that can help lower your property taxes. For example, veterans, senior citizens, disabled persons, and those with a low income may qualify for exemptions. In Washington state, the senior citizen property tax exemption is available to homeowners who are at least 61 years old and have lived in their home for at least five years. The low-income property tax exemption is available to homeowners whose household income is below a certain threshold. Additionally, there are credits available for homeowners who have made energy-efficient improvements to their homes. In King County, you can find more information on exemptions and credits available at HERE.
Consider a property tax deferral
In addition to the senior citizen property tax exemption, Washington state also offers a senior property tax deferral program. This program allows eligible senior citizens to defer a portion of their property taxes until the property is sold or the homeowner passes away. To qualify for the program, homeowners must be at least 61 years old, have lived in their home for at least five years, and have a household income below $58,423 including Social Security and other sources (for 2022 tax year). Homeowners must also provide proof of ownership and residency, as well as an application fee.
To apply for the senior property tax deferral program, visit the King County Tax Assessor's website (HERE) and download the application. You will need to submit the completed application along with the required documentation and application fee to the King County Tax Assessor's office. It is important to note that interest will accrue on the deferred taxes, and the program may have an impact on the sale or transfer of your property.
There are additional deferral options for those that are disabled or low-income, as well.
Hold your property as an LLC or Family trust
Holding your property as an LLC or family trust can provide asset protection and can also potentially reduce your property taxes (not to mention possibly benefit your federal income taxes or business costs.) LLCs and family trusts can provide a way to divide the ownership of a property among multiple parties, which can lower the assessed value of the property and result in lower property taxes. However, it's important to consult with a tax professional or attorney to determine if this strategy is appropriate for your situation and to ensure that you are in compliance with all applicable laws and regulations. If you need an introduction to a great tax or real estate attorney - reach out!
CK's Top Tip for First-Time Homeowners
Your property tax bill is probably included in your mortgage payment. Many homeowners choose to include their property taxes in their mortgage payments through an escrow account. This means that your mortgage lender will pay your property taxes on your behalf and include the cost in your monthly mortgage payments. If you're unsure whether your property taxes are included in your mortgage payment, check with your mortgage lender.
By understanding your property tax bill and taking advantage of the exemptions, credits, and programs available to you, you can reduce your property taxes and save money. If you're unsure of where to start or need more specialized advice, consider reaching out to a tax advisor or real estate attorney. If you're in need of a referral, reach out! I can connect you with a professional who can help you navigate the process of reducing your property taxes.