Every week, Mansion Global poses a tax question to real estate tax attorneys. Here is this week’s question.
Q: How do I know if I qualify for a tax break under the new Washington state statute?
A. Last month, Governor Jay Inslee signed HB 1355 into law, which expands property tax exemptions for senior citizens and disabled veterans. The bill, which passed unanimously in both the House and the State Senate, increases the income threshold required to qualify for property tax exemptions and deferrals.
“To qualify, service-connected veterans and senior citizens must have an annual income level that is below the new threshold, which varies by county,” said Carmelo Carrasco, co-founder of Axel Property Management. For example, in King County, the income threshold to receive some tax relief was increased from $58,400 to $72,000.
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Moving forward, the precise amount of the tax break will vary by income level, said Mr. Carrasco. There are three distinct income thresholds in the bill. Income threshold one is defined as 50% of the county median household income. Income threshold two is defined as 60%, and income threshold three is defined as 70%.
Seniors and veterans at or below income threshold one qualify for a complete tax exemption on the greater of $60,000 or 60% of the valuation of their residence, while those who qualify but earn at a higher rate will see less significant tax reductions. These income thresholds will be reevaluated every three years and updated according to the growth of the consumer price index.
The bill received wide support as a means to address the senior housing crisis in Washington. “In the last couple years, I’ve heard from way too many senior homeowners who’ve literally, in some cases, been in tears about the property taxes, who say ‘I don’t know how I can afford this but I don’t know where [else] I’m going to live,’” King County Assessor John Wilson told the Seattle Times.
“That’s the dilemma we’ve put seniors in with this real estate market,” he said. “Taxes go up, values go up, but there’s no alternative housing for these folks.”
Wilson indicated that, for a home valued at $690,000, a homeowner could save over $5,000 in property taxes annually under the new law.
The law goes into effect on August 1, 2023, and homeowners will see the impact of the change on their 2024 taxes based on their 2023 income.
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