Do disabled veterans pay property tax in Washington?

Sec. 2, Your tax bill

What the exemption does to your tax bill

Expect a smaller bill with some tax still on it.

Everyone who qualifies is exempt from voter-approved excess levies and the state property tax, plus, in some cases, the part of local regular levies that voters approved above the normal limit, when the ballot measure provided for the exemption. Households under the lower income thresholds get more: a portion of the home’s value is also exempted from regular levies. On top of that, the home’s taxable value is frozen at the value when you first qualify, with exceptions for things like new construction on the property.

What’s left is usually the remaining local regular levies on the frozen value, plus whatever other charges the county bills with property tax. Your assessor can estimate the result for a specific parcel. I’d get that estimate before you count on a particular monthly payment.

Sec. 3, The income test

The income test, and what doesn’t count as income

The income test uses what Washington calls combined disposable income. That’s your income plus your spouse’s or domestic partner’s, plus the income of any co-owner living in the home. The limits are set county by county, based on each county’s median household income, and the Department of Revenue publishes the current figures.

The part that matters most for veterans: VA disability compensation and Dependency and Indemnity Compensation are excluded. So is VA attendant care. Wages and retirement pay generally count, along with most other income.

Some costs come off the total before it’s compared to the limit, including prescription drugs, in-home or facility care, Medicare premiums and supplemental policies, and long-term care insurance. Keep receipts. They can be the difference between thresholds.

Sec. 4, Applying

Applying in Pierce County, or in Thurston County for Yelm

You apply to the assessor in the county where the home sits. For Lakewood, DuPont, Spanaway, University Place, Steilacoom, Puyallup, Roy, and Tacoma, that’s the Pierce County Assessor-Treasurer. For Yelm, Rainier, Lacey, and Olympia, it’s the Thurston County Assessor. If you aren’t sure which county a Yelm-area address is in, the Nisqually River is the line, and the parcel search on either assessor’s site settles it.

Gather these before you start:

• Your VA benefit letter showing your combined rating, or a total disability rating, and that you’re receiving compensation.
• Income records for everyone whose income counts, usually the prior year’s tax returns and benefit statements.
• Proof of identity and that the home is your primary residence. The county’s form lists what it accepts.
• Receipts for any deductible medical and care costs.

Once approved, you renew at least every six years, on a schedule the assessor sets. Report changes in between, such as a move or a big change in income.

Sec. 5, Timing a purchase

Timing it with a home purchase

Washington property tax runs a year behind. The home is valued in one year and the tax is paid the next, in two halves due April 30 and October 31. To qualify, you have to own and occupy the home as your primary residence by December 31 of the year before the taxes are due.

That makes the calendar worth a look when you’re writing an offer. A family that closes and moves in during December can apply for the next year’s taxes. A family that closes in early January generally waits a year. If your report date falls near the turn of the year, it’s one more reason to plan the purchase backward from it, the way the PCS home buying timeline lays out.

Two things trip up buyers. First, a seller’s exemption doesn’t carry over. If the seller is a senior or a disabled veteran, the tax figure on the listing may be far lower than what you’ll pay before your own application is approved. Ask your lender to budget the full, unexempted tax. Second, if your lender collects taxes through an escrow account, the account is sized on the tax before your exemption, and it’s adjusted once the county applies it. That often waits for the lender’s annual escrow review, so the savings show up later than people expect.

Sec. 6, The funding fee

How it fits with the VA funding fee exemption

These are two separate programs that happen to read the same VA letter. The funding fee exemption is federal and applies to your VA loan at closing. Veterans receiving compensation for a service-connected disability are generally exempt at any rating, and service members with a proposed or memorandum rating issued before closing can qualify too. The property tax exemption is state and county, needs a higher rating, and adds an income test.

Many veterans qualify for one and not the other. A veteran rated at 30 percent may skip the funding fee and still pay full property tax. Check both separately. The funding fee section of the loan basics page has who’s exempt, and your lender will confirm it from your Certificate of Eligibility.

The exemption also covers only the home you live in. If you PCS away and keep the house as a rental, it stops being your primary residence, and you need to tell the assessor. That’s one of the quieter costs to weigh in deciding whether to sell or rent the house when you leave JBLM. If you’re buying acreage outside Yelm or Roy, the county line also decides who handles your septic paperwork, which I cover in VA loans on well and septic homes.

This is general information about how the program works. Confirm your rating step and your county’s income limits with the Pierce County Assessor-Treasurer or the Thurston County Assessor, and talk to a tax professional about your own situation.