HomeMy WebLinkAboutProperty Tax deferral limited income1
WASHINGTON STATE DEPARTMENT OF REVENUE
Washington state has a property tax relief program for
homeowners with limited income.
Overview
As a participant in this deferral program, you are electing
to postpone or defer one-half of the property taxes and/
or special assessments you owe for your residence. The
Washington State Department of Revenue pays one-
half of the annual property taxes on your behalf. You
will repay the amount you defer plus interest when a
triggering event occurs. We will discuss repaying the
deferral later in this brochure.
Qualifications
You need to pay the first one-half of property taxes each
year before applying to defer the second one-half of
property taxes due. In addition, the deferral program
qualifications are based off of ownership, occupancy, and
income. Details of each qualification follows.
Ownership
You must own the home for at least five years before
you apply for your first deferral. You must own the home
in fee to qualify. Ownership in a cooperative housing
association, a life estate (including lease for life), or a
revocable trust do not qualify. An irrevocable trust may
qualify. The deferral is limited to the residence, which
may include one accessory dwelling unit, and one acre
of land. Certain zoning or land-use regulations may allow
additional acreage.
A home jointly owned by a married couple, registered domestic partners, or co-tenants is considered wholly
owned by each joint owner. A co-tenant is a person who
has an ownership interest in your home and lives in
the home. Only one joint owner needs meet the age or
disability qualification.
Occupancy
You must occupy the home for more than six months
in the calendar year prior to the deferral year. You may
continue to qualify even if you spend time in a hospital,
nursing home, boarding home, adult family home, or
home of a relative. However, a residence used as a
vacation home is not eligible.
Income
Your combined disposable income cannot exceed $57,000.
Combined disposable income includes your disposable
income plus the disposable income of your spouse or
domestic partner and any co-tenants received during the
calendar year prior to the deferral year.
Combined disposable income does not include income of a person who:
• Lives in your home but does not have ownership
interest (except for a spouse or domestic partner).
However, you must include any money that person
contributes to the household expenses.
• Does not live in the home but has ownership
interest. If another person(s) has ownership
interest, but does not live in the home, only
your percentage of interest will qualify for the
exemption.
Calculating disposable income Disposable income includes income from all sources,
even if the income is not taxable for federal income tax
purposes. Some of the most common sources of income
include:
• Social Security and Railroad Retirement benefits.
• Military pay and benefits.
• Veterans benefits except attendant-care payments,
medical-aid payments, veteran’s disability
compensation and dependency and indemnity
compensation.
Property Tax Deferral for
Homeowners with Limited
Income
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WASHINGTON STATE DEPARTMENT OF REVENUE
• Pension receipts. Include distributions from
retirement bonds and Keogh plans. Include only
the taxable portion of Individual Retirement
Accounts (IRA’s).
• Business or rental income. You cannot deduct
depreciation.
• Capital gains other than the gain from the sale
of your residence that was reinvested in another
residence within one year.
• Capital, business, or rental losses cannot be
deducted or used to offset gains or other income.
• Annuity receipts.
• Interest and dividend receipts.
If you have questions about your sources of income,
contact your county assessor.
Deductions from disposable income
After calculating disposable income, deduct insurance
premiums you paid for Medicare Parts A, B, C, and D, and
non-reimbursed amounts paid for:
• Living in a nursing home, boarding home, or adult family home.
• Prescription drugs.
• In-home care that is similar to the care you would
receive in a nursing home.
In-home care includes:
• Medical treatment.
• Physical therapy.
• Special needs furniture or equipment.
• Meals on Wheels (or similar services).
• Household care.
• Personal care.
Personal care includes assistance with:
• Preparing meals.
• Getting dressed.
• Eating.
• Taking medications.
• Personal hygiene.
Property taxes and special assessments eligible for deferral
The amount of equity you have in your property
determines the amount of property taxes and/or special
assessments you can defer.
Equity is the difference between the assessed value of the
property and any debts secured by the property.
If you meet all qualifications and maintain a fire and
casualty insurance policy that names the Washington State Department of Revenue as a “Loss Payee”, you can
defer taxes and special assessments up to 40% of the
equity of your land and residence. Without a fire and
casualty insurance policy or if your policy does not name
Washington State Department of Revenue as a “Loss Payee”, only the land value is used to calculate equity.
Applying for the deferral
Your county assessor administers the deferral program
and is responsible for determining if you meet the
qualifications. Applications and supporting documents
for each qualification are due by September 1. You must renew your deferral each year. Your assessor will send you
a renewal notification if you applied the previous year.
If your county assessor denies your application, they
will notify you in writing. 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 the denial, whichever date is later.
Repaying the deferral
You need to repay the amount deferred plus interest
when any of the following triggering events happen:
• You transfer ownership of your property to someone else.
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WASHINGTON STATE DEPARTMENT OF REVENUE
• You no longer permanently reside at the residence.
• Your property is condemned.
• You no longer maintain a fire and casualty
insurance policy naming the Washington State
Department of Revenue as a loss payee in an
amount that is sufficient to protect the interest of
the state, and the deferred amount exceeds 100%
of your equity in only the land value.
• You die (unless your surviving spouse or domestic partner meets the qualifications of the deferral
and agrees to assume the liability).
Rate of interest
Deferred taxes accrue interest at a rate equal to the
federal short-term rate plus two percentage points.
Laws and rules
Revised Code of Washington (RCW) Chapter 84.37—Property tax deferral program.Washington Administrative
Code (WAC) Chapter 458-18A—Limited income deferral
program.
Questions, more information, request an application
If you have questions regarding the property tax deferral
program, application form, or the application process,
contact your local county assessor’s office.
dor.wa.gov
This material is intended for general information
purposes and does not alter or supersede any
administrative regulations or rulings issued by the
Department of Revenue.
To request this document in an alternate format,
please complete the Accessibility Request Form or call
360-705-6705. Teletype (TTY) users please dial 711.
PT0057 09/23/2023