Seattle's popularity is skyrocketing, with an ever-increasing number of people eager to call the Emerald City their home.
It makes sense. Seattle has a lot to offer: A booming technology hub, reasonable weather (no, it doesn't rain every day), and an excellent range of nature and urban amenities right outside your doorstep.
The downside to all of these benefits is that Seattle has become an increasingly expensive place to live. If you’re planning on moving to Seattle, you need to consider many factors into your budget other than just the cost of your mortgage.
One of the biggest considerations? Seattle property taxes.
In this article, we're going to cover everything you need to know about property taxes so you can plan your financing properly and get yourself into this beautiful and exciting area.
Before we can begin understanding how to navigate property taxes in Seattle, we need to talk about how property taxes work in general.
Property taxes are influenced by local government budgets, often determined by a city council. Local budgets are key, as property taxes fund essential services like schools, police, fire departments, and infrastructure.
Higher budget needs typically lead to higher property tax rates.
The assessed value of a property is based on its estimated market value, which is determined by local tax assessors. They consider factors such as the property's size, location, condition, and recent sales of similar properties in the area. This assessed value is used to calculate property taxes to ensure every property owner is taxed fairly.
Let's break this down further.
Imagine a town with four different houses, each valued differently and a required city budget of $1000. If the total value of all the houses equaled $100,000 then the property tax rate would be one percent.
This means that each person would be required to pay one percent of the value of their home to property taxes. Everyone is paying the same tax rate, but those who have a higher home value will pay a higher fee.
But who decides how properties are valued?
In order to determine the monetary value of a home in a particular area, you need the help of an assessor.
Assessors are the ones responsible for appraising homes and property based on certain qualifying factors. They don’t set the tax rate themselves. Assessors attempt to identify the value of a property with as much accuracy and fairness as possible.
They do this with a very thorough process that involves comparing similar houses, size of the property, age, curb appeal, renovations, and so much more.
It's not as simple as comparing two houses sitting next to each other. It takes a home visit to fully understand the value of the property. This allows home assessors to take every factor into consideration, including location and proximity to desirable amenities such as parks and green spaces, and even current style trends.
Assessors are required to evaluate properties every five years so that the tax rates can continue to change based on the overall value of homes in the city.
Once they’ve determined the value of these properties, it is up to the city to figure out how much money they need for municipal expenses and how much of those expenses are to be taken from property taxes. This required amount, known as the levy, is then distributed among property owners based on the assessed values of their properties.
From public transportation to affordable housing projects, or expanding floating bridges, the people who govern the city of Seattle are always looking to make improvements and show their constituents progress.
These endeavors to improve life in the city mean that tax rates fluctuate over time. That’s because these types of projects require funding, and the city gathers its funding from taxes. In addition to property taxes, we all pay sales tax, gas taxes, and other forms of tax for similar purposes, depending on your region.
Now that you have a better understanding of property tax as a whole, we can learn a bit more about the tax rates in Seattle, Washington.
In Seattle, voters play a key role in shaping property taxes through voter-approved special levies. The community-endorsed funds in a levy support specific projects like school renovations, park expansions, and public safety improvements. This system is a common way to address funding needs beyond the regular budget.
It's beneficial to stay informed about these levies and their impact on your overall tax responsibility. It’s also important to remember that it's not the city of Seattle that determines levies and the property tax rate, but rather, the county it is in (ex: King County).
Knowing this information will not only help you plan your expenses when considering real estate in Seattle but also give you peace-of-mind knowing where those tax dollars are going.
Seattle's recent growth has increased the demand for housing, affecting property taxes as well. The tax rate in King County is currently 1.05%. With Seattle's median home price at $872,500, the annual median property tax exceeds $9,000.
Homeowners should be aware of these taxes to ensure they can afford the total cost of living. In a state with high housing costs like Washington, understanding where property taxes and levies go helps homeowners see how their money supports the county.
King County, where Seattle is located, supports several programs and agencies that your property tax money will be going towards in the coming year:
Keep in mind that property tax levels change year to year as budgets, plans and new levies are introduced. To understand these changes and what it means for the amount you’ll be paying, it's worth talking to an expert who knows the ins and outs of King County's property taxes.
That discussion is all part of knowing how much you can afford in Seattle's housing market before you make a decision—and annual taxes are a big part of that.
While that median price of $9,000 a year in property tax may sound high, you should first break it up into monthly payments. Remember, you aren't required to pay all of that money at once.
If you buy a home priced in the median range for Seattle ($872k), then you would be looking at an estimated $760 a month in taxes. That seems a lot more digestible, right?
Median property taxes are calculated based on the median home price, multiplied by the property tax rate of the county where the home is located.
Home values vary across the county, which is why some of the outlying areas around the city of Seattle are attractive to buyers.
For example, the median home cost in Tukwila, Washington, is closer to $595,000, meaning the annual median property tax you would pay is around $6,200.
If you are still shaking your head at the property tax rate here in Seattle, there are some tax-specific benefits of living in King County you should consider. For example, there are other forms of taxes you won't be paying in Washington.
Washington is one of the few states that does not collect personal income tax or corporate tax. That's one of the many reasons that industry is so big here in Seattle.
We are home to four of the country's largest corporations including Amazon, Microsoft, Boeing, and Starbucks. There is also a very generous job market and a much higher minimum wage. In Seattle, the minimum wage is set at $19.97 an hour. That's more than double the national rate.
So while you may be spending a bit more in property taxes, you also have a lot more going for you in regards to income and savings.
Don't let the property tax in Seattle scare you away from buying a home in this incredible city.
There is so much to offer here that keeps the quality of life high.
When it comes to budgeting for your mortgage, don't forget to factor in the cost of taxes into your monthly payments. This will save you from scrambling at the end of the year to make due.
And of course, for more information regarding real estate and property taxes in Seattle, reach out to Seattle’s Mortgage Broker for expert help that will get you into your perfect Seattle home.
