QUESTIONS
The following commonly asked questions and their answers
provide an overview of the Island County Assessor's responsibilities
and the underlying laws by which they were established.
Please remember these important facts about the Assessor's
Office-
- The Assessor performs the function of an appraiser in
placing a dollar value on your home or other property.
- The amount of regular property taxes that are collected
do not increase because assessed values increase.
- The Assessor does not establish the dollar amount of
taxes that will be collected, but chooses the lowest amount
from a group of state-imposed alternatives.
- The tax rate for each district is either specifically
voted by taxpayers or calculated mathematically by the
assessor based upon state limitations, budgets submitted
by taxing districts, and the assessed value for the district.
- The Assessor does not bill for or collect property taxes.
The County Treasurer's Office bills and collects taxes.
WHAT
KINDS OF PROPERTY ARE TAXABLE?
Under Washington state law, two types of property are assessed
and taxed.
Real
Property:
Real property consists of the land, improvements attached
to the land (buildings, manufactured homes, etc.), and
improvements to the land (driveways, utilities, etc.).
Personal
Property:
Taxable personal property includes agricultural machinery
and equipment; manufacturers', contractors' and logging
machinery and equipment; office machinery and equipment;
and supplies and materials which are not held for sale
or do not become an ingredient or component of an article
being produced for sale. Furniture and fixtures in commercial
use, leased equipment, certain leasehold improvements,
franchises and easements of inter-county public utilities,
lessee-owned improvements on public land and commercial
vessels not subject to excise tax are also assessed and
taxed as personal property.
Many types of personal
property are exempt from taxation. these include livestock;
inventories held solely for resale; specific intangible
property such as money, bonds, stocks or share of corporations,
mortgages, notes and the like; and the personal effects
and household goods in actual use by their owner.
Although
intangible personal property may not be taxable, in some
cases, intangibles may be used to estimate the value of
real property, expecially when the income approach has
been applied.
HOW
IS THE VALUE OF REAL PROPERTY DETERMINED?
In Washington State, assessment for tax purposes means establishing
the full market value of your land and the improvements
thereon. This is the job of an appraiser. Appraisal methods
used in Island County follow basic practices and procedures
used in the appraisal professionand in Computer Aided Mass
Appraisal (CAMA). Island County is an annual county.Almost
55,000 parcels of real property are appraised each year.
The only way to accomplish this task is by Computer Aided
Mass Appraisal (CAMA).
Three
approaches may be used to determine real property value.
they are:
- Market: The market data (sales comparison)
approach
- Cost: The reproduction or replacement
cost new, less accrued depreciation derived from market
analysis
- Income: Which relies on the capitalization
of economic rents or discounted cash flow analysis.
These approaches
are applied as follows:
- Any combination of the three techniques may be applied,
in appraising real property.
- The Income and Cost approaches are given greater weight
in the appraisal of improved commercial and industrial
properties.
- The market and cost approaches are given greater weight
in the appraisal of improved residential properties.
- The value of vacant land is most often determined using
the market approach.
Whenever the Assessor
revalues your property, you will receive a "Valuation
Change Notice" .
HOW IS THE VALUE OF PERSONAL PROPERTY DETERMINED?
Most personal property assessments are based on information
provided by the taxpayer on personal property affidavit
forms furnished by the Assessor. The affidavits are mailed
to established accounts by January 1 each year, and must
be returned to the Assessor by April 30. Affidavits for
new business reporting for the first time may be mailed
after January 1. Extensions of filing date are not
granted . A tax penalty of 5% per month will be
applied to affidavits received after April 30. The Assessor
may waive the penalty if the late filing is due to reasonable
cause. A penalty of 25% of the tax due in the following
year will be applied for failure to file an affidavit.
The Assessor uses information provided by the taxpayer to
determine value, taking into consideration the age, cost,
and type of property. When the affidavit is processed and
the property valued and entered on the assessment roll,
a Personal Property Assessment Notice
is mailed to the taxpayer.
IS PROPERTY ASSESSED AT FULL VALUE?
Yes, the State Constitution requires property to be assessed
at 100% of its true and fair value. The appraisal process
is the responsibility of the Assessor, who values property
on a cyclical basis according to a revaluation plan filed
with the State Department of Revenue. In Island County,
revaluations have been done every year since 1985.
WHAT DETERMINES THE AMOUNT OF PROPERTY TAX?
The cost of state and local government determine how much
property tax will be levied. These include operating costs
of schools; city and county government; and other taxing
districts such as county, county roads, library, hospital,
fire and sewer districts. A large part of each property
tax dollar goes to pay off bonds for such capital costs
as school buildings and other public projects.
HOW ARE PROPERTY TAX LEVIES ESTABLISHED?
The State Constitution, statutory levy limits set by the
legislature, and excess levies approved by the voters are
used to calculate the total property tax levy. The tax rate
on your property is the figure resulting from dividing the
dollar amount required for the taxing district by the total
taxable value of property within the district, and then
adding up the rates of the various districts in which your
district is located. The assessed value of your property
multiplied by the combined rate produces a tax amount which
is your fair share of the total property tax levy in your
area. The Island County Treasurer issues tax statements
and taxes are paid to the Island County Treasurer's Office.
WHAT
ARE THE LEGAL LIMITATIONS ON PROPERTY TAXES?
The
1% constitutional limit:
The
primary limitation on property taxes was established by
amendment to the Washington State Constitution in 1972.
Article 7, Section 2 of the Constitution RCW 84.52.050
limits the total regular property tax levy to a
maximum of $10.00 per $1,000 of the market value of property.
Excluded from this limit are levies for ports and public
utility districts as well as voted special levies
which are not regular levies.
Statutory
maximum rate for districts:
RCW
84.52.043 establishes maximum levy rate for the types
of taxing districts (the state, counties, cities and towns,
fire districts and the like). In addition, the statute
establishes a maximum aggregate rate of $5.90 per $1,000
of assessed value for counties, cities, fire districts,
library districts and certain other junior taxing districts.
The state levy for support of common schools is not subject
to the $5.90 limit, although it is subject to the constitutional
$10 limit.
The
101% limit:
In
1971, RCW Chapter 84.55 established a limitation on the
increase on regular property taxes for taxing districts.
The current limitation each year for most districts
is 101% of the highest, lawful levy since 1985, plus an
additional amount to allow for new construction within
the district. Thus, if a district's maximum
levy were $1,000,000, the 101% limit would allow them
to increase to $1,010,000 the following year.
The
101% limit applies to the total amount of revenue collected
for a taxing district, not to an individual's property
tax.
With
majority voter approval, districts may increase their
budgets or levies in excess of the 101% limit. If
approved, such a vote would allow the district to exercise
more levy authority for at least one year.
These
"Lid Lifts" as they are called, may be temporary
(by default) or permanent. The 1% constituional
limit and the statutory maximum rates may not be exceeded,
regardless of voter approval, unless the district has
been specifically excluded by statute.
Resolutions:
Each
district is required to make a resolution each year if
they plan to apply the rules for an increase under the
101% levy limit.
The district
is limited to the lower of 101% of the previous highest
lawful levy or 1+ the Implicit
Price Deflator for Personal Consumption Expenditures (IPD),
as of July of the year preceding the tax year. If
the IPD
were .8%, then the resolution could be no more than 100.8%
instead of the 101% that would have otherwise been authorized.
Districts
with populations under 10,000 may elect to apply the maximum
101% factor even if the IPD is under 1%. However,
districts with populations over 10,000 would hold to have
a public hearing and pass a second resolution by a super
majority (60%) stating a substantial need existed to exceed
the IPD limit.
If the amount of the resolution is less than the maximum
levy calculated using these limits, they would only be
entitled to collect the lower amount.
Budgets:
The budget
of each district is their certified levy and will override
any other limitation as long as it is lower. Thus,
a district with a budget of $1,000,000 that budgets for
only $900,000 would be entitled to collect no more than
$900,000 in taxes that year.
If
the district's budget exceeds the resolution, they would
be limited to collecting the amount authorized in the
resolution, even if they would have otherwise been entitled
to collect the higher amount.
If
a district fails to certify their budget for the levy,
they are not entitled to collect any taxes that year.
Excess
levies:
Most
districts can submit propositions for additional property
tax levies to a vote of the people. Local school districts
have no regular levy authority (althoughfunds from are
allocated to them from the statewide school levy), so
they receive a substantial portion of their funding from
voter-approved excess levies.
Excess
levies must be authorized by a a 60% majority of the vote,
and such levies are subject to any of the limitations
described above.
Voters recently
chose to remove the 60% majority requirement from school
district maintenance and operation levies, changing it
to a simple majority instead.
WHAT
HAPPENS IF LEVY LIMITS ARE EXCEEDED?

The
regular levy for each taxing district is reviewed by county
authorities for compliance with the 101% limit, and the
$5.90 and the 1% limits before the levy is made. If the
statutory or 101% limits are exceeded by an individual district,
then their levy is reduced to a lawful amount.
The
statutes establish a district hierarchy for rate reductions
if the aggregate limits (statutory district rate limits,
1% constitutional limit, the $5.90 aggreagate limit) are
exceeded. The rates for the districts would
be reduced by the assessor according to the proscribed formulas,
if any of these limits were to be exceeded.
OTHER
QUESTIONS?

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