During its 1985 session, the Washington State Legislature determined that as the state approached its centennial year, the preservation of a lasting legacy of historic resources was an important goal. In order to reach this goal, the legislature passed a law that allows a "special valuation" for certain historic properties within the state.The primary benefit of the law is that during the ten-year special valuation period, property taxes will not reflect substantial improvements made to properties that are eligible for special valuation, and designates a local review board that reviews applications. For example, if a property owner incurs qualified rehabilitation costs that equal at least 25% of the building’s assessed value within a 24-month period prior to application, those qualified costs can be subtracted from the newly assessed value of the property for 10 years. The intent of the legislation was to take away the disincentive of increased property taxes that was created when a property owner substantially improved a property.
While this program was created at the state level, local jurisdictions are required to adopt an ordinance in order to allow property owners to take advantage of the tax deduction. See the state’s Model Historic Preservation Ordinance for specific language on Special Valuation.
For further information contact your local jurisdiction to see if they are offering Special Valuation.
Oftentimes, income producing historic rehabilitation projects package Special Valuation with Federal Historic Tax Credits to maximize incentives. Click on the link to find out more.