February, 2012 - MyTicor

Property Tax Appeals and Exemptions

On February 28, 2012 / Blog, Property Info - Customer Service

This time of year usually brings a renewed interest in property taxes. We’ve written about the property tax annual cycle before. Today we’re going to address the question of tax appeals and exemptions.

Is it possible to reduce what I pay for property taxes?

Download

To download a printable version of this article, click here.

For many of us the answer is probably no. There is an appeals process plus a number of programs where property owners may qualify for exemptions or deferrals.

Property Tax Appeals

Each county provides specific information on appealing your property tax valuation. This information will include instructions on how to appeal, when you may appeal, what evidence you will need to provide, tools for gathering information, and a description of the appeals process.

You may qualify

According to the King County Department of Assessments, there are more than 26,000 senior citizens and disabled persons that qualify for exemption yet they have not enrolled.

One of the more common reasons to appeal is a change in property value. For this reason each county provides free databases (or online search tools) that you can use for locating sold properties that are comparable to yours. If you can find similar properties that sold for less than the assessed value of your home, it may be worth your time to appeal your valuation.

Comparable Sales – Comparable sales are properties of a similar lot size, quality, living area, age, and added details like view or waterfront. If you are planning on appealing your property tax valuation, you may be required to list comparable sales that support your request on your appeal petition.

Errors in your property description – From time to time the assessor may make errors in the description of a property. Any errors in how your property is described should be noted in your petition. You can also provide other documentation such as pictures, repair bids, or geology reports if there are structural or site problems that would reduce market value.

Property Search tools

It’s the law

State law requires the Assessor to value all taxable property at 100 percent of its true and fair market value in money, according to the highest and best use of the property.

King County Property Search
Pierce County Property Search
Snohomish County Property Search

Information on appeals
King County Property Tax Appeals
Pierce County Property Tax Appeals
Snohomish County Property Tax Appeals

Property Tax Exemption & Deferral Programs

Some taxpayers may qualify for tax exemptions or tax deferrals. Exemptions generally provide a reduction in the amount of taxes due, whereas deferrals provide temporary relief by applying the deferred taxes as a lien against the property.

Below are a few categories of exemptions & deferrals provided by the Washington State Department of Revenue. The county assessor administers these programs and is responsible for determining if applicants meet the qualifications. Questions about these programs should be directed to the county assessor’s office.

Deferrals
Property tax deferral program for senior citizens and disabled persons
Property tax deferral program for homeowners with limited income

Assistance in the form of a Grant
Property tax assistance program for widows or widowers of veterans

Exemptions
Property tax exemption for nonprofit organizations
Property tax exemption program for senior citizens and disabled persons

Finally, there is a large list of other possible deferrals & exemptions available through the county assessor that may be available for a qualifying property depending on it’s condition, historic significance, or how it is used.

What would siri have to say about saving on property taxes?

Some examples are:

Homeowner Improvement
Flood and Storm Damaged Property
Current Use Open Space
Current Use Forest Land
Historic Property
Designated Forest Land
Character building benevolent, protective or rehabilitative social services
Veterans and relief organizations
Libraries
Orphanages
Day care centers
Nursing homes and hospitals
Schools and colleges
Art, scientific and historical collections
Fire companies
Humane societies
Musical and artistic associations
Public assembly halls
Certain public authorities
Sheltered workshops for the disabled

As a reference, here are some resources for King, Pierce, and Snohomish counties.

King County

Address	Department of AssessmentsProperty Tax Advisor Office516 3rd Ave, Room 1236Seattle, WA 98104Toll Free: 1-800-325-6165 ext. 5-6330TTY: 206-205-6338 Fax: 206-296-0948 taxadvisor@kingcounty.gov
Exemption Questions	(206) 205-6330
Website	Appeals
Comparable Sales	Comparable Sales

Pierce County

Address	Assessor-TreasurerAnnex (Public Services Building)2401 South 35th Street Room 142Tacoma, WA 98409(253) 798-6111pcatr@co.pierce.wa.us
Exemption Questions	(253) 798-6111
Website	Appeals
Comparable Sales	Comparable Sales

Snohomish County

Address	Assessor’s OfficeFirst Floor, Administration Building East3000 Rockefeller Ave, M/S 510Everett, WA 98201425-388-3615contact.assessor@co.snohomish.wa.us
Exemption Questions	(425) 388-3540
Website	Appeals
Comparable Sales	Comparable Sales

Real Estate Investor Tries to Defraud the IRS

On February 21, 2012 / Blog, Escrow

IRS Liens & Over-Encumbered Property

Foreclosures are just one of many challenges facing our country in this economic crisis. People are not only failing to pay their mortgages, but they have also fallen short on many other obligations. Paying taxes is one of them. It has become common for an IRS lien to appear on a title report.

The IRS, however, is not in the business of owning real estate so they regularly work with taxpayers to release the property from the lien. They do not discharge the lien altogether, but examine the transaction and often release the property when they can determine there will be no proceeds because the property is over–encumbered. Read on to find out how one settlement agent was duped into assisting a real estate investor trying to defraud the IRS.

One deed and one lien

One of our sister offices in Las Vegas opened a sale transaction. The seller was a real estate investor who purchased the property only a few months earlier. Title was held as John Doe, an unmarried man. When the title report came in it showed the property was encumbered by only one deed of trust along with a tax lien. The tax lien was against a limited liability company (LLC) and its members, one of whom was our seller Doe. The settlement agent, Betty, contacted Doe to inform him she needed to order a demand from the IRS.

He explained the lien was against the LLC, was not his personal obligation and should therefore not affect his sale. Betty explained she could not close without a release of lien for this property from the IRS. She asked Doe if she should proceed with ordering a demand from the IRS or if he would be contacting them to negotiate a release of the property only. Doe told her he would take care of it.

A second deed appears

A couple of weeks later Doe asked Betty to update the title report, as there should be a second deed of trust of record. He also requested a HUD–1 Settlement Statement showing a payoff of both loans resulting in no proceeds to him. He planned on submitting the HUD–1 to the IRS to induce them to release the property from the tax lien. Betty thought this was odd and contacted management.

Unbeknownst to Betty – Jane, another settlement agent within the Company, handled the initial purchase of this property for Doe. Jane contacted management about the IRS lien, as she had heard the property was under contract and now in escrow with another settlement agent within the Company. Jane was curious about the IRS lien since it was against the LLC and not Doe individually, and did not appear on her title report when Doe acquired the property.

Since both calls came at the same time, management reviewed the updated title report and documents. The second deed of trust had been prepared by someone in the Company and notarized by Jane. Management noticed the document was dated two months earlier, when Doe purchased the property, yet it was recorded only a few days ago. When management inquired about the document, Jane explained Doe had come into her office and said he forgot to have her prepare and record a deed of trust in favor of his investor on the purchase. He asked her to help him out, and she allowed Doe to back–date the deed of trust and she back–dated the notarial certificate. Jane gave the original to Doe who promptly recorded it.

No-go for Doe

Doe was contacted by management who told him they would not be providing him with an updated title report reflecting this fraudulent deed of trust. They made it clear to Doe Our Company would not assist in defrauding the IRS. Fortunately they were able to convince Doe he was headed down the wrong course and he did not proceed.

Settlement agents are considered the last honest people in a real estate transaction. The IRS certainly counts on it. When the IRS agrees to provide a release in order to allow a taxpayer to sell their over–encumbered property, their approval is conditional. It is conditioned upon receipt of a HUD–1 Settlement Statement confirming the seller received no proceeds. The IRS knows, per Title 18 U.S. Code Section 1001 and 1010, “It is a crime to knowingly make false statements to the United States on this or any other similar form. Penalties upon conviction can include a fine and imprisonment.” Upon confirmation from the settlement agent the IRS prepares and records their release.

Moral Of The Story

Jane’s behavior is inexcusable. Settlement agents should never allow a document to be back–dated in their presence. Settlement agents who are also commissioned notaries should never participate in back–dating a notarial certificate. Lastly, settlement agents should never prepare courtesy documents.

The Probate Path – Married, Separate Property…

On February 14, 2012 / Blog, Title Insurance

Our last Probate Paths blog discussed the effect of death on community property. Today, we talk about another complicated situation involving marriage, another marriage, and death.

Sudden death, no will, and an outdated will…

Hank and Dagny were happily married and living in the family home they bought together. Both had been married before and each had children from those marriages. Hank and Dagny died tragically in December in an avalanche while skiing in the Alps. Dagny never made a will. Hank left an old will in which his son Hank Junior and daughter Randi were the sole devisees. Hank’s will didn’t mention their current home or Dagny. The house is listed for sale by his probate.

What’s the Realtor® to do? And how would the title company approach it?

Download the Probate Path Flow-Chart

Click the image or link below to download a printable version:
Probate Path – Married, Separate Property Flow Chart.

Who passed away first?

Because they bought their house together it would be community property and under normal circumstances the surviving spouse gets it. Since it isn’t in Hank’s will it’s not part of his probate estate. However, it would be if Dagny dies before he does. But – how can it be established who died first – or even if either did? In this situation the presumption would be that they died simultaneously, but how does that help?

The three children could try to dispute who gets what, especially considering the house could be worth a lot and the rest of the estate might be quite substantial. Maybe they are all one happy family and agree that the house can be sold and the proceeds divided up amicably. Or – Alice might claim 100% for herself, arguing that Hank died first and her mom got everything. Hank Jr. and Randi might do the same. Definitely Hank’s will is going to be probated, and Alice will likely want to open a probate on Dagny’s estate as well. But, what if she doesn’t?

Separate property scenario

Here, separate property rules will be applied – to each spouse. The title company will assume that each estate will treat this situation as if each spouse had pre-deceased the other, odd as that might sound. As community property, on the death of either of them, the home would go to the other and would become 100% separate property of the surviving spouse. That rule applies to both spouses here, but then the separate property of each “surviving” spouse is dealt with. The title company would follow a separate probate path for each estate.

The potential interest of each of the three children (plus any other devisee identified in Hank’s will) must be addressed. “

If there is no probate on Dagny’s estate it would certainly call for a “lack of probate” affidavit where Alice gives the facts as she interprets them. The title would also rely on the facts that Hank’s probate will tell them. The potential interest of each of the three children (plus any other devisee identified in Hank’s will) must be addressed. During the pendency of a probate it would probably accept a deed from the personal representative based on an order of the probate court clearing the sale.

The appropriate probate path if Dagny had pre-deceased Hank

Let’s start with Dagny. If she died first, under community property rules Hank would end up with the house. For however many years (or in this case, moments) that he survives Dagny, the house is his, and Alice would get nothing when he died. Then, at the moment of his death, his will would come into play, and Alice would end up with nothing, because she could get only what Dagny would have gotten – but she was already dead and so couldn’t inherit. Junior and Randi get the house.

This is Probate Path No. 3 if his will is probated. If his will is not probated, it’s Probate Path No. 4. Of course, in the latter case, the title company would want a “lack of probate” affidavit, which would probably assert that he was unmarried at death. In that case, Alice would be out of luck. But, that can’t be applied for certain, because the order of death isn’t known.

The appropriate probate path if Hank had pre-deceased Dagny

Similarly, if Hank died first, then Dagny immediately gets the house. His will wouldn’t control. Again, for however long Dagny survives him, the house is hers alone. Then, upon her death Alice, as her only heir – Hank having pre-deceased her – gets the house. As noted, however, this rule can’t be applied because no one knows who died first.

Assuming that both spouses have pre-deceased each other

So, there are two separate property estates, each of which would assume that the respective separate heirs or devisees would get an interest. If only Hank has a probate, the PR would sign for his estate (following Probate Path No. 1), and Alice would sign for her mom’s estate (following Probate Path No. 3).

If the probate is closed without the house being sold, then the title company would ask for individual deeds from Wesley, Randi and Alice, with escrow distributing the proceeds of the sale in accordance with mutual instructions from all three.

Questions or comments? Please share below!

The Property Tax Annual Cycle

On February 7, 2012 / Blog, Title Insurance

There are few things in life that are as certain as taxes, especially when it comes to buying, selling, and owning real estate. In this article, we’re going to take a look at property taxes, including when they are due, when they may be paid, how they’re calculated, and what tax relief programs are available.

The Property Tax Timeline

Download the Property Tax infographic

Click here to download a printable version of the Property Tax annual cycle. A graphical depiction of the annual property tax cycle

Property taxes have a timeline that is different than most other taxes or bills that we pay. Let’s take a look at the facts:

Taxes are due twice a year, but towards the middle each cycle
First half taxes are due at the end of April and cover January through June
Second half taxes are due at the end of October, and cover July through December

Click the following link to download a printable version of the Property Tax Annual Cycle Infographic.

Property tax proration

Because taxes are due toward the middle of the period they cover, a real estate seller may receive a refund or pay prorated taxes depending on the closing date. For example, a sale that closes in March will have both parties paying prorated taxes: the seller pays for January 1^st to date of closing, and the buyer pays from the closing date to June 30^th. A closing that happens in May, would give the seller a refund for prorated taxes from the closing date to the end of June, since the seller would have paid in April for the entire first half of the year.

Can property taxes be paid in advance?

When are taxes due?

1^st half are due the last day of April, 2^nd half are due the last day of October. King County mails out a statement in the middle of February (February 14^th for this year – Happy Valentine’s Day!)

Taxes for the second half of the year can be paid in advance, but the first half can’t. Washington State law (RCW 84.56.010) doesn’t allow county treasurers to collect property taxes until February 15 of the year that they are due. So the first half is typically payable any time between Feb 15^th and April 30^th; and the second half is typically payable any time between Feb 15^th and October 31^st. It is not necessary to have a tax statement to mail in with your payment. If you decide to mail in your payment without a tax statement, you must write your tax account number on the check. Mailed payments must be postmarked on or before the due date otherwise they will be considered late.

How are property taxes calculated?

How taxes are calculated

The two factors used in the calculation of taxes are the assessed value of the property and the levy rate for that area. Levy rates are represented in dollars per thousand, so to calculate the tax amount multiply the assessed value by the levy rate and divide by 1,000.

The property tax for a given parcel are based on a fairly simple calculation: multiply the total assessed or taxable value of the parcel by the levy rate for that parcel’s neighborhood. In addition there can be fees added by the county to cover specific services like noxious weed control.

Last Year’s Assessed Value x This Year’s Levy Rate = Tax Amount Due

What determines the levy rate?

The levy rates are determined by a number of factors, including the results of voter-approved levies. Property taxes usually aren’t certified until the middle of February, even though the assessments were mailed out the previous year (which often causes confusion). In other words, the assessed valuation statement you get in the 2^ndhalf of this year has no effect on the taxes you are paying this year. The valuation will be used in the calculation for next year’s taxes. You won’t know the actual tax you will need to pay for 2012 until the county certifies 2012 taxes in the middle of February, even though 2012 assessed values have been available for months.

Assessed value vs. taxable value

The assessed value is typically the same as the taxable value except in cases where the taxpayer has applied for and received an exemption. For example, senior and disabled property owners may qualify for tax reductions. In some cases home improvements may qualify for a 3-year exemption for taxes on the value of the improvement. For more information on possible exemptions or tax defererals, contact the Assessor-Treasurer for the county in which the property is located.

What tax relief programs are available?

Here are some examples of programs and special classifications available that provide tax relief:

Open Space Classification for Agricultural land, Timberland, and Natural preserves.
Designated Forest Land Classification for timberland parcels 20 acres or more.
Historical Restoration Exemption for historical significant property undergoing restoration.
Improvement Exemption – Single Family Dwellings a temporary exemption of valuation of additions to single-family dwellings.
Destroyed Property Claim adjustment to the valuation of destroyed property. (please note this program is handled by the Admin department, for further information please contact them at 425 388-3038).
Property tax exemptions for senior citizens and disabled persons
Full tax deferrals for senior citizens and disabled persons.
Exemptions for qualifying property owned by non-profit organizations.
Property tax deferral for those with limited income.

Property tax resources:

King County property tax resources

King County Assessor-Treasurer hotline:	(206) 296-3850
Find your tax parcel account number:	King County tax parcel search
See or print a tax statement:	View or print King County tax statements here.
Make online payment:	Pay King County Property Taxes Online
Make checks payable to:	King County Treasurer
Mailing addresses for property taxes:	King County Treasury 500 Fourth Avenue, Room 600 Seattle, WA 98104

Pierce County property tax resources:

Pierce County Assessor-Treasurer hotline:	(253) 798-6111
Find your tax parcel account number:	Pierce County tax parcel search
See or print a tax statement:	View or print Pierce County tax statements online here.
Make online payment:	Pay Pierce County Property Taxes Online
Make checks payable to:	Pierce County
Mailing addresses for property taxes:	Pierce County Budget & Finance P.O. Box 11621 Tacoma, WA 98411-6621

Snohomish County property tax resources:

Snohomish County Assessor-Treasurer hotline:	(425) 388-3433
Find your tax parcel account number:	Snohomish County Tax tax parcel search
See or print a tax statement:	View or Print Snohomish County tax statements online here.
Make online payment:	Pay Snohomish County Property Taxes Online.
Make checks payable to:	Snohomish County Treasurer
Mailing addresses for property taxes:	Snohomish County Treasurer 3000 Rockefeller Ave, M/S 501 Everett, WA 98201