How are property taxes determined?

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Recently, after receiving a rate quote, a home buyer asked me, “What would the difference in taxes be if I bought in Pierce County verses King County?”

Property taxes actually vary by the city the property is located in. Some areas in Tacoma have much higher taxes than what you may find in Seattle.  The variance is largely do to the levies that are passed for things such as schools. Think back to the last time you voted and the various items that were attached to real estate property taxes for funding.

Cities have tax levy rates that are used for determining the actual taxes based on the homes tax assessed value. It’s important to note that the tax assessed value is not the same as your appraised value. The taxed assessed value may be higher or lower and, if you feel the value is not accurate, you can actually protest the value to try to have it reduced.

When I prepare a mortgage rate quote for a potential client, if we do not have the actual property taxes for the home, we use 1.25% of the homes estimated value. This amount is then divided by 12 for come up with the monthly property taxes to be included in the mortgage payment.

It’s very important, if you’re shopping for a home, that you provide your mortgage professional with the current property taxes for a home that you’re considering making an offer on. Your mortgage professional should provide you with an updated quote that includes the property taxes for the specific home and of course, current interest rates. This will help assure that you qualify to purchase that home and allows you to have a better idea of what your new mortgage payment will look like.

It’s also important to know that property taxes may change over time…typically they go up! This is because of property taxes being based on the assessed value of the home and the levies that get passed that are attached to home values. It’s not unusual to see your property taxes bump up right after you’ve purchased your home. Your home purchase is “public record” and the county tax assessor can see that someone (you) has valued the home at your recorded sales price. If your sales price is higher than the current assessed value, count on higher property taxes. Your mortgage payment will be adjusted (higher or lower) when your property taxes change.

Here is more information from the State of Washington regarding property taxes.

If I can help you with your home purchase or refinance for property located anywhere in Washington state, where I am licensed, please contact me!

 

 

 

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