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Commercial property taxes

Learn more about how we assess and tax commercial property.
Seattle skyline with buildings and docks

How we assess commercial property

We assess commercial property each year at its full market value. This is the price at which a property should bring in a competitive and open market.

The 3 methods used to determine real property value include:

  1. Sales comparison approach: Compares a property to comparable sold properties.
  2. Cost approach: Land plus replacement cost new of the structure(s) less depreciation.
  3. Income approach: Capitalization of net operating income.

Commercial property valuation generates figures for land and improvement(s). State law requires all land to be valued as if vacant, using the Highest and Best Use principles. Values are determined using the sales comparison approach by first analyzing comparable vacant land sales.

The next step is to establish the total property value. We consider all three approaches to appraise improved commercial and industrial properties. However, the method that offers the best evidence of market value will be employed. The cost approach adds the depreciated improvement(s) figure(s) to the land value. The income and market approaches generate a total value; the improvement figure is calculated by deducting land from this total.

Property owners receive an official property valuation notice whenever a new value is generated. The statement contains the prior and current year values for land and improvements.

How we calculate commercial property tax

The amount of tax you pay depends on state and local government costs. It includes the operating costs of:

  • Schools
  • Roads
  • Parks
  • Libraries
  • Hospitals
  • City and county government
  • Other taxing districts such as ports, fire, utility, and sewer districts

A large part of each property tax dollar pays off construction bonds for school buildings and other public projects.

To determine your tax rate, officials divide the total amount of money needed for your district by the total value of property in your district. Then, they add up all the levy rates of the various taxing districts in which your property is located. The assessed value of your property, multiplied by the combined rate, produces a tax amount that is your fair share of the total property tax levy in your area. The King County Treasurer issues tax statements. You pay taxes to the King County Treasury Operations.

Some real estate or personal property is exempt from property tax based on its use or ownership. Learn about current use tax relief programs.