The average property-tax bill across King County has jumped 35 percent in the last four years, due to quickly climbing property values and newly approved tax hikes.
As rising housing costs continue to price more and more people out of the Seattle real-estate market, people who already own homes are facing a financial pinch of their own: rising property-tax bills.
New data shows King County homeowners pay among the highest property taxes in the country, and that tax bills have been growing quickly with soaring property values and newly approved tax hikes.
The average owner of a single-family house across the county will pay $5,660 in property taxes this year, up from $5,175 last year.
Average annual property tax in King County’s biggest cities
Federal Way: $3,761
Source: King County Assessor’s Office
It’s the fourth straight year of steep increases: Overall, the average property-tax bill has soared 35 percent since 2013, according to the county assessor’s office, though it can vary significantly from home to home because of the complex local tax system.
For someone buying the typical house in Seattle today, property taxes add about $400 a month onto a monthly mortgage payment of about $2,600.
Of course, the tax increases didn’t just fall from the sky: A majority of voters approved them. And the rising home values that also help drive up property taxes mean homeowners who eventually sell will make that added tax money back and then some.
But those with no plans to sell are in a tougher spot — especially since the tax increase has been rather sudden. In Seattle, the average annual home property-tax bill has jumped about $920 in the past two years. Over the prior decade, taxes rose only at about the rate of inflation, or about an extra $80 per year.
Henrik Straub, who owns a small apartment building in northwest Seattle, just got slapped with a 25 percent property-tax bump for that property, or an extra $10,000 a year, because of new taxes and a huge jump in its assessed value. It’s the biggest increase he can recall in his 40 years as a local landlord, and works out to an extra $30 per month for each apartment.
“That’s quite a blow, in one jump. That’s just way too much,” he said. “If it keeps going up at the same rate, you just have to have a gigantic (rent) increase in our building. We do run a business, so the money has got to come from someplace.”
Could be worse
Just because taxes went up so much doesn’t mean every government agency got a big windfall: Generally, the bulk of the added money goes toward things voters recently approved, like more affordable housing and transit expansion.
Where does that tax money go? In Seattle, nearly half goes to state and local school operations and construction, while about 22 percent goes to the general city budget and 8 percent heads to the county budget.
The rest goes to services or projects designated for funding with additional property taxes, like transportation, affordable housing, parks and open space and libraries.
There is, to be sure, an added level of complexity to the narrative about High Seattle Taxes: Namely, it could be worse.
Overall, King County last year had the 22nd-highest home prices among the 586 biggest U.S. counties, yet had the 67th-highest property-tax bills, according to Attom Data Solutions, which collected tax data from around the country and compared it to each home’s current market value.
The gap exists because our effective property-tax rate — the portion of a home’s market value that is taxed — is actually among the lowest in the country.
Local homeowners pay an average 0.85 percent of their home’s current market worth in property taxes, or 34 percent lower than the national average, according to the Attom data. That’s no chump change: If Seattle homes had the same effective property-tax rate as an average city, tax bills here would be about $3,000 a year higher than they are now.
King County property-tax rates are also below the state average, and have been for at least the last decade and a half.
“It’s actually cheaper to live here than in many parts of the country, from a (property) tax basis,” said Windermere chief economist Matthew Gardner, who reviewed the property-tax data. “Yes, we understand, the perception is that property taxes are high, as we always happily complain. That is human nature. But, if one does think about it relative to the value of our homes, then a lot of people might say, ‘Well, it’s not that bad.’ ”
Still, he doubts many people will find much solace in that argument: “Next year, without a doubt, people will probably be complaining again.”
Diane Coyne, whose property tax on her Seattle home has increased more than $800 in the past two years, knows it could be worse. She pointed to her sister, who pays a higher tax bill despite having a much cheaper home in upstate New York, a region that has among the nation’s highest property-tax rates.
“I’ve been able to deal with (the tax increase); it wasn’t astronomical,” Coyne said. But if taxes keep going up at that rate, “I’ll notice the difference. I think we’re just in the beginning of feeling the effects of it.”
Wendy Redding got a 59 percent tax increase over the past couple of years at the triplex she and her husband own in Ballard, where they live in one unit and rent out the other two. The two-year bump added $3,000 a year in taxes to their property, which has jumped in value by more than $300,000 since they bought it in 2010.
“It makes you wonder, what’s it going to be like in five years?” Redding said. The increase “totally caught us off-guard. It has been hard. If you’re truly on a fixed income, like we’re going to be in a couple years, it would be really, really hard.”
How property taxes work
Part of the reason our effective property-tax rates are so low is that our property-tax system is so complicated, in a way that generally benefits homeowners.
Like everywhere, our taxes are determined by combining home values and the tax rate, but the local rates change every year, and not just because of what voters or politicians do.
Consider the situation in Seattle, where voters approved several new or expanded property taxes that kicked in this year, led by the huge regional Sound Transit expansion that added $25 in tax for every $100,000 in assessed value starting this year. In theory, that would make tax rates go higher. And yet — the average tax rate in Seattle went down slightly this year.
How could that be? Because there are limits on how much certain taxing districts, like schools and transit operators, can collect in property taxes. And all the new construction locally added more tax revenue overall — so to keep the total revenue pie mostly the same, officials had to balance it out by charging everybody a slightly smaller rate.
But those limits only go so far. Voters can override the cap by approving new or expanded taxes for specific purposes, like Sound Transit, and voters have done just that in recent years. Without those tax hikes, the overall tax rates would have dropped even more.
On top of all that, the assessed value of homes in Seattle jumped 10 percent in the last year.
Add it all up — higher property values, a bigger tax base approved by voters and new construction lessening the load — and you get an average 2017 tax bill that grew 7 percent in Seattle compared to last year.
Your tax bill also depends on where you live.
More-expensive towns typically have a lower tax rate than cheaper ones, but of course the owners of the priciest homes pay the most overall.
For instance, homeowners on Mercer Island, where the median home value is above $1 million, pay 0.8 percent of their home value in taxes, while it’s 1.5 percent in low-cost Auburn. Yet the average Mercer Island tax bill is $8,840, compared to $4,060 in Auburn.
Looking at all taxing jurisdictions in the county, the biggest average tax bill is $22,300 in ritzy Hunts Point (where the typical home tops $3 million), and the lowest is the $1,220 average bill in Skykomish (where homes have a bargain-basement price of $124,000).
Generally, homeowners get a bit of a break on their bills because assessed values used to determine taxes are lower than the market values of homes today. For instance, the county lists the median Seattle house as being worth $528,000 for tax purposes, but the latest sales figures show they’re selling for a median $700,000.
That discrepancy exists in a lot of places around the country, Gardner said. But it’s exacerbated here because home prices are rising so quickly it’s hard for the assessor’s office to keep up.
There are also tax exemptions, including tax reductions for lower-income seniors and disabled people.