A unique Capitol Hill mansion is offered for sale at $15 million, but the property tax comes free thanks largely to an obscure state law.
The priciest home now for sale in Seattle is a stunner: A $15 million historic mansion upgraded with sleek modern features and gorgeous views atop Capitol Hill.
But one of the Sam Hill Mansion’s unique features is equally stunning: a property tax bill of $0.
It’s one of only two houses in King County with free property tax. The owners of the 106-year-old mansion on East Highland Drive haven’t paid property taxes on it for six years, even as Seattle property taxes have soared 25 percent in the last four years.
King County historic properties with $0 property tax bills, and their current assessed value
Western Building lofts/warehouse, Pioneer Square: $16.6 million valuation
Museum of History and Industry, South Lake Union: $13 million valuation
Furuya & Corgiat office buildings on Second and Main, Pioneer Square: $10.7 million valuation
Milwaukee Hotel retail building, Pioneer Square: $2.8 million valuation
Sam Hill Mansion, Capitol Hill: $2.6 million valuation
Youngstown Cultural Arts Center, West Seattle: $2.6 million valuation
Windham Apartments, Belltown: $1.6 million valuation
House on 1073 Summit Ave E., Capitol Hill: $993,000 valuation
Masin retail property at Washington and Second, Pioneer Square: $803,000 valuation
Source: King County Assessor’s Office
The mansion made waves in the local real-estate community when it came on the market last week for $15 million, or $3 million more than the next most expensive listing in Seattle. The five-bedroom, 6½ -bath recently underwent a multimillion-dollar renovation and is more than seven times bigger than the typical Seattle home.
It features a rooftop terrace with a spa, a gym inside and chic features that resemble a brand-new house more than a century-old castle.
So how did the zero tax bill come about?
To encourage owners of officially designated historic properties to fix up their relics, the state lets them deduct what they spent on the rehab from the values used to determine property tax bills for 10 years. About 60 properties in King County use the program.
But in nine cases, the city’s Landmarks Preservation Board determined the value of the rehab work exceeded the entire value of the property, wiping out the whole bill.
Seven of those are commercial properties, including a museum and a cultural center. Then there’s an old three-bedroom home on Capitol Hill, and the Sam Hill Mansion.
The tax savings is significant: At the Hill Mansion’s current assessed value, its annual property tax would be about $24,360, or nearly a quarter-million dollars over the 10-year span of the exemption. That’s only based on an assessed value of $2.6 million, a fraction of the listing price, as the assessor’s office hasn’t inspected the home since its recent renovation at a cost of $6.4 million.
The homeowners, former Vulcan executive David Capobianco and his wife, Rosangela, might get the money that scored them the tax exemption back and then some: If the home sells for their asking price, they’d net $11.7 million more than they paid for it nine years ago.
David Capobianco, now CEO of a Texas-based energy investment company, is moving to Houston with his wife. (He was last in the news when he and a former co-worker won a $20 million court battle after Paul Allen’s Vulcan Capital fired him in 2008.)
A spokesman for the couple said they worked with historians and “left no stone unturned” in rehabbing the mansion to “restore the home to its former glory.” He noted the upgrades increased the value of the home, likely resulting in larger property-tax revenue after the 10-year exemption expires in 2021.
The Capobiancos do pay $1,850 per year in property taxes on a separate, vacant plot of land next to the mansion that would be included in the sale. And the mansion carries $894 in separate annual fees for stormwater services, weed abatement and such.
“We are deeply humbled to have lived in this historic home and to have undertaken a meticulous restoration of the entire property,” David Capobianco said in a statement in response to a request for comment. “But for my professional obligations in Houston, our family would have enjoyed the home for many years to come.”
Another reason for the zero tax bill is the way the county Assessor’s Office valued the property — at $2.6 million, it’s less than what the Capobiancos paid for it a decade ago, before the huge renovation. Redfin, for one, estimates the home is worth $14.1 million.
The assessed value is important: At a $15 million valuation, even with the tax break the property owners would still have to pay $81,800 a year.
Bailey Stober, a spokesman for the Assessor’s Office, said part of the work could have been repairs that wouldn’t necessarily increase the home’s value.
The office last inspected the home right as the first wave of work was under way and isn’t due to check it out until next year.
“So up until this listing went online, we had no clue what the inside of the home looked like,” Stober said.
They relied instead on a market analysis, which can be tricky for luxury homes with few comparable sales, and would be especially difficult given the uniqueness of the Sam Hill Mansion and its rich backstory. It was built by the prominent businessman to entertain foreign dignitaries. Among its quirks were a bedside button Hill used to turn on every light on the property, and a little door that led to a secret passageway.
Hill also built the Peace Arch on the border of Washington and Canada, and a Stonehenge replica near his Maryhill mansion on the Columbia River.
Stober said the Assessor’s Office found a nearby home that was 3,000 square feet bigger, rated in better shape and that sold two years ago for $7.7 million, just half the asking price of the Capobiancos’ home.
“If this sale goes through, we will use that data along with data collected during the next physical inspection to set a new value,” he said.
It’s unclear what the interest level in the home has been during its first week on the market since the real-estate website Curbed first picked up on the listing, as the listing agent didn’t respond to requests for comment.