By Kathryn Wheeler
On October 3, the San Juan County Assessor’s Office issued its annual “Notices of Change in Value” to homeowners in the county. A Change in Value Notice is sent when a property has been assessed to be higher or lower than the previous year’s value, based on the county’s assessment team. This year, 1,600 change in value notices were sent to residents, an increase of 200 over last year.
Property values have long been a topic of discussion on San Juan Island, where a common sentiment expressed is the high cost of housing. It is widely recognized that housing costs have risen steadily in the county, due to the growing popularity of the islands as a place to live.
Reassessments of every property in the county, based on market value, are conducted annually, while physical inspections take place in different tax districts every six years. This year’s inspection cycle included 2,782 properties in the central areas of the town of Friday Harbor and Brown and Dinner Islands, including inspections of 762 newly built parcels.
According to the San Juan County Appraiser website, “The total assessed value for San Juan County is $12.5 trillion, including $129 million in new construction value. Assessed value increased by $2,735 million over last year. While that may seem like a significant change, John Kulseth, the county’s chief assessor, explained that the increase in value ratings is actually not significantly different from recent years, nor cause for concern.
“Assessment can be a tricky process,” Kulseth explained. “People argue over our opinion of the value of their property,” he continued, “people not trying to buy think they were too high, people trying to sell think ‘they’re too low.’
The appraisal can seem personal to many, causing arguments with the appraiser’s office and appeals. Owners can formally appeal the notice of change in value within thirty days of receiving it in early October. When this happens, Kulseth will go over the numbers and, according to him, “Make sure our records are correct and make sure the inspector was accurate and that there have been no changes since the last inspection.” He pointed out that while meeting an angry resident is difficult, “it’s a good and necessary part of due process.” Kulseth is keen to clarify that “the important thing to remember with these reviews is that this is an objective process, we are trying to reflect the market”
Kulseth explained that there are common misunderstandings regarding notices of change in value. Often people believe that if property values fluctuate, property taxes will also fluctuate. When asked about this, Kulseth admitted that it was a very difficult question to answer. What drives taxes is the tax district budget, he said, not value assessments.
According to the Washington State Department of Revenue website, property taxes are limited to an increase of 1% per year unless residents vote yes on bills that raise them. This 1% property tax is levied by “the state, counties, cities, schools, and several other ‘junior’ tax districts such as fire districts and hospitals.” The annual tax statement residents receive in February breaks down these levies by district, with each district applying a specific rate, which are added together to determine the amount of property tax a resident will pay.
Although the state applies a strict property tax of 1% per tax district, it does not necessarily apply to the taxation of a single-family home. Single-family home rates depend on a property’s assessed value relative to the value of other properties in their tax district, not the county as a whole. If a property increases significantly in a year, often associated with home improvements, its property taxes are likely to increase that year.
Appraisers use the previous year’s sales data, which means it reflects the previous year’s market, not the current one. While it’s unclear how property taxes will fluctuate until they’re calculated in January, Kulseth can say one thing with certainty: “People just pay a lot of money for property here.”
Kulseth claimed to have witnessed local bidding wars, escalation clauses and general market volatility over the past few years. He can attribute some of that to the influx of remote workers due to the pandemic, and some to the general rise in ownership costs nationwide. Market developments have a number of contributing factors, as does taxation, many of which can be difficult to understand, especially for the ordinary citizen.
As a landlord himself, Kulseth sympathizes with the citizens. “Rising people’s taxes is hard on all of us,” he said, adding that “I would be in line with people saying [the system is] doesn’t work very well. While the Legislature is currently trying to figure out a better way to fund government services, not just through property taxes, the system shows no signs of changing anytime soon.
Despite the confusion and stress the system can cause, Kulseth believes that “the real estate market is generally a good investment and tends to increase year on year.”
In these unstable times, “I was elected to obey the law and I think we are doing a good job doing that,” Kulseth said. “I keep telling myself to come here and do as fair and honest a job as possible.”
To learn more about how property taxes are calculated, visit the Washington State Department for Revenue. Seniors, non-profit organizations, homeowners with limited income, widowers of a veteran, or people with disabilities may be eligible for a tax exemption or referral. All of the above information can be found at https://dor.wa.gov. To speak to someone about the process, email the San Juan County Assessor’s Office at [email protected] or call 360-378-2172