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Guide to Washington Tax Structure - Part 3

Senior Citizens and Disabled Persons Property Tax and Special Assessment Deferral

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What is this program?                                                      

The Senior Citizens and Disabled Persons Property Tax and Special Assessment Deferral Program postpones payment of your property taxes or special assessments. Unlike the exemption program, this program is not a reduction of your taxes.  On your behalf, the Department of Revenue pays the deferred property taxes and special assessments to your local Treasurer.

A special assessment is for a local improvement that directly benefits your property. Examples include assessments for sewers, lights, water, paving or curbing. Special assessments are also known as Local Improvement Districts (LlDs) or Utility Local Improvement Districts (ULlDs) .

The amount of the postponed taxes and/or special assessments, plus 8% interest per year, becomes a lien by the state until you pay the total amount  The lien, filed with the County Auditor, shows the State of Washington as having an interest in your property.

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Eligibility Requirements                                

What property is eligible?
Ownership
Age or Disability
Residency
Household Income
Insurance
Amount eligible for deferral

What Property is Eligible: The exemption and deferral are available for your principal home and up to one acre of land. Mobile homes may qualify as residences for both programs even if the applicant does not own the land where the mobile home is located.

Ownership: You must own the property in total (fee owner) or under a contract purchase. The lien holder or beneficiary must co-sign the application for deferral if the mortgage or purchase contract requires a reserve account for the payment of taxes.  You are not eligible to defer your taxes if you have a life estate, lease for life, or share ownership in a cooperative housing unit.

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Age or Disability:  To be considered a senior citizen, you must be at least 60 years old on December 31 of the year in which you apply. To be considered disabled you must be unable to work because of a physical disability. A Proof of Disability Statement must be completed by your physician. This form can be obtained from the Assessor´s Office.

Residency:  The property must be your principal place of residence on the date of your application. You must occupy the home for at least six months each year.  Your residence may qualify even if your are temporarily in a hospital, nursing home, or boarding home licensed under RCW 18.20.030 or adult family home licensed under RCW 20.128.050.  You may rent your residence to someone else during your hospital, nursing home, boarding home, or adult family home stay, if the income is used to pay the hospital, nursing home, boarding home, or adult family home costs. 

Property used as a vacation home is not eligible for the program.  

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Household Income: To qualify for this program, your household income may not exceed $40,000. If your household income is less than $35,000, you must first apply for the exemption program. For example, if your household income is $22,000 and the assessed value of your property is $175,000, you must first apply for the exemption program. After the exemption is applied, taxes will be based on a value of $70,000 ($175,000 less allowed 60% exemption).  This value will help determine the amount of property taxes you are eligible to defer.

Insurance: You need to keep in force a fire and casualty insurance policy in an amount enough to protect the interest of the State of Washington. The insurance policy must show the State of Washington as loss payee. You must provide the Department of Revenue with a copy of the policy within 60 days of application.  If you do not carry insurance, you may only defer property taxes and special assessments based on the amount of equity you have in the property using only the land value.                                                                

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Amount Eligible for Deferral: The amount of equity you have in your home determines the amount of property taxes and/or special assessments eligible for deferral. Equity is the difference between the assessed value of the property and all debts secured by the property. You must provide current balances for all debts that are secured by the property.

Providing you meet all qualifications and maintain adequate fire and casualty insurance, you may defer taxes and special assessments in an amount up to 80 percent of your equity.

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How to Apply                                                   

Filing Period

Annual Application
Signing the Application

Filing Period: You should apply at least 30 days before payment of property taxes and/or special assessments are due.  If you apply late, the County or City Treasurer will assess late penalties and interest.  Late penalties and interest will increase the amount of the lien filed by the state.  If you are applying to stop the County Treasurer from foreclosing for unpaid taxes,  you must apply within 30 days of receiving the foreclosure notice.

Annual Application: You must apply each year you want to defer taxes or special assesments.

Signing the Application: You, your agent, or your legal guardian must sign the application.  If the contract purchase agreement, deed of trust, or mortgage requires a reserve account for the payment of property taxes, the lien holder's notarized signature must also be on the application.                                                              

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When Deferred Amounts Must Be Paid

The deferred amount and interest must be paid when:

  • The property is transferred or conveyed to someone else,
  • You pass away, unless your spouse qualifies for the deferral and files an application with the County Assessor within 90 days of your death,
  • You no longer permanently reside at the residence.
  • Fire and casualty insurance is not kept in an amount sufficient to protect the interest of the state and the deferred amount exceeds 100 percent of equity of the land value.
  • The deferred amount, plus interest, exceeds 80 percent of the equity in the insured value of the residence plus the land value.

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Appeal Process                                               

The County Assessor must tell you if your application is denied. You may appeal the Assessor´s decision to the County Board of Equalization.  The County Board of Equalization must receive your appeal by July 1 or within 30 days of when the denial notice was mailed, whichever date is later.