Wash. Admin. Code § 458-07-030 - True and fair value - Defined - Criteria - Highest and best use - Data from property owner
(1)
True and
fair value -- Defined. All property must be valued and assessed at one
hundred percent of true and fair value unless otherwise provided by law. "True
and fair value" means market value and is the amount of money a buyer of
property willing but not obligated to buy would pay a seller of property
willing but not obligated to sell, taking into consideration all uses to which
the property is adapted and might in reason be applied.
(2)
True and fair
value--Criteria. In determining true and fair value, the assessor may
use the sales (market data) approach, the cost approach, or the income
approach, or a combination of the three approaches to value. The provisions of
(b) and (c) of this subsection, the cost and income approaches, respectively,
shall be the dominant factors considered in determining true and fair value in
cases of property of a complex nature, or property being used under terms of a
franchise granted by a public agency, or property being operated as a public
utility, or property not having a record of sale within five years and not
having a significant number of sales of comparable property in the general
area. When the cost or income approach is used, the assessor shall provide the
property owner, upon request, with the factors used in arriving at the value
determined, subject to any lawful restrictions on the disclosure of
confidential or privileged tax information.
(a)
Sales. Sales of the property
being appraised or sales of comparable properties that occurred within five
years of January 1st of the assessment year are valid indicators of true and
fair value. In valuing property, the following shall be considered:
(i) Any governmental policies or practices,
regulations or restrictions in effect at the time of appraisal that affect the
use of property, including a comprehensive land use plan, developmental
regulations under the Growth Management Act (chapter 36.70A RCW), and zoning
ordinances. No appraisal may assume a land usage or highest and best use not
permitted under existing zoning or land use planning ordinances or statutes or
other government restrictions, unless such usage is otherwise allowed by
law;
(ii) Physical and
environmental influences that affect the use of the property;
(iii) When a sale involves a real estate
contract, the extent, if any, to which the down payment, interest rate, or
other financing terms may have increased the selling price;
(iv) The extent to which the sale of a
comparable property actually represents the general effective market demand for
property of that type, in the geographical area in which the property is
located; and
(v) Sales involving
deed releases or similar seller-developer financing arrangements shall not be
used as sales of comparable property in determining value.
(b)
Cost. In determining true
and fair value, consideration may be given to cost, cost less depreciation, or
reconstruction cost less depreciation.
(c)
Income. In determining true
and fair value, consideration may be given to the capitalization of income that
would be derived from prudent use of the property, as limited by law or
ordinance. Consideration should be given to any agreement between an owner of
rental housing and any government agency that restricts rental income,
appreciation, and liquidity and to the impact of government restrictions on
operating expenses and on ownership rights in general of such
housing.
(d)
Manuals.
Appraisal manuals or guides published or approved by the department of revenue
shall be considered in conjunction with the three approaches to value. The data
contained in these manuals or guides must be analyzed and adjusted by the
assessor to consider time, location, and any other applicable factors to
properly reflect market value in the county.
(3)
True and fair value -- Highest and
best use. Unless specifically provided otherwise by statute, all
property shall be valued on the basis of its highest and best use for
assessment purposes. Highest and best use is the most profitable, likely use to
which a property can be put. It is the use which will yield the highest return
on the owner's investment. Any reasonable use to which the property may be put
may be taken into consideration and if it is peculiarly adapted to some
particular use, that fact may be taken into consideration. Uses that are within
the realm of possibility, but not reasonably probable of occurrence, shall not
be considered in valuing property at its highest and best use.
(4)
Valuation of land and
improvements. In valuing any lot, tract, or parcel of real property, the
assessor must determine the true and fair value of the land, excluding the
value of any structures on the land and excluding the value of any growing
crops. The assessor must also determine the true and fair value of any
structure on the land. The total value of the land and the structures must not
exceed one hundred percent of the true and fair value of the total property as
it exists at the time of appraisal.
(5)
Valuation data from property
owners. The assessor may require property owners to submit pertinent
data regarding property in their control, including sales data, costs and
characteristics of improvements, and other facts necessary for appraisal of the
property.
Notes
Statutory Authority: RCW 84.08.070. 09-04-035, § 458-07-030, filed 1/29/09, effective 3/1/09; 00-01-043, § 458-07-030, filed 12/7/99, effective 1/7/00.
State regulations are updated quarterly; we currently have two versions available. Below is a comparison between our most recent version and the prior quarterly release. More comparison features will be added as we have more versions to compare.
(1) True and fair value -- Defined. All property must be valued and assessed at one hundred percent of true and fair value unless otherwise provided by law. "True and fair value" means market value and is the amount of money a buyer of property willing but not obligated to buy would pay a seller of property willing but not obligated to sell, taking into consideration all uses to which the property is adapted and might in reason be applied.
(2) True and fair value--Criteria. In determining true and fair value, the assessor may use the sales (market data) approach, the cost approach, or the income approach, or a combination of the three approaches to value. The provisions of (b) and (c) of this subsection, the cost and income approaches, respectively, shall be the dominant factors considered in determining true and fair value in cases of property of a complex nature, or property being used under terms of a franchise granted by a public agency, or property being operated as a public utility, or property not having a record of sale within five years and not having a significant number of sales of comparable property in the general area. When the cost or income approach is used, the assessor shall provide the property owner, upon request, with the factors used in arriving at the value determined, subject to any lawful restrictions on the disclosure of confidential or privileged tax information.
(a) Sales. Sales of the property being appraised or sales of comparable properties that occurred within five years of January 1st of the assessment year are valid indicators of true and fair value. In valuing property, the following shall be considered:
(i) Any governmental policies or practices, regulations or restrictions in effect at the time of appraisal that affect the use of property, including a comprehensive land use plan, developmental regulations under the Growth Management Act (chapter 36.70A RCW), and zoning ordinances. No appraisal may assume a land usage or highest and best use not permitted under existing zoning or land use planning ordinances or statutes or other government restrictions, unless such usage is otherwise allowed by law;
(ii) Physical and environmental influences that affect the use of the property;
(iii) When a sale involves a real estate contract, the extent, if any, to which the down payment, interest rate, or other financing terms may have increased the selling price;
(iv) The extent to which the sale of a comparable property actually represents the general effective market demand for property of that type, in the geographical area in which the property is located; and
(v) Sales involving deed releases or similar seller-developer financing arrangements shall not be used as sales of comparable property in determining value.
(b) Cost. In determining true and fair value, consideration may be given to cost, cost less depreciation, or reconstruction cost less depreciation.
(c) Income. In determining true and fair value, consideration may be given to the capitalization of income that would be derived from prudent use of the property, as limited by law or ordinance. Consideration should be given to any agreement between an owner of rental housing and any government agency that restricts rental income, appreciation, and liquidity and to the impact of government restrictions on operating expenses and on ownership rights in general of such housing.
(d) Manuals. Appraisal manuals or guides published or approved by the department of revenue shall be considered in conjunction with the three approaches to value. The data contained in these manuals or guides must be analyzed and adjusted by the assessor to consider time, location, and any other applicable factors to properly reflect market value in the county.
(3) True and fair value -- Highest and best use. Unless specifically provided otherwise by statute, all property shall be valued on the basis of its highest and best use for assessment purposes. Highest and best use is the most profitable, likely use to which a property can be put. It is the use which will yield the highest return on the owner's investment. Any reasonable use to which the property may be put may be taken into consideration and if it is peculiarly adapted to some particular use, that fact may be taken into consideration. Uses that are within the realm of possibility, but not reasonably probable of occurrence, shall not be considered in valuing property at its highest and best use.
(4) Valuation of land and improvements. In valuing any lot, tract, or parcel of real property, the assessor must determine the true and fair value of the land, excluding the value of any structures on the land and excluding the value of any growing crops. The assessor must also determine the true and fair value of any structure on the land. The total value of the land and the structures must not exceed one hundred percent of the true and fair value of the total property as it exists at the time of appraisal.
(5) Valuation data from property owners. The assessor may require property owners to submit pertinent data regarding property in their control, including sales data, costs and characteristics of improvements, and other facts necessary for appraisal of the property.
Notes
Statutory Authority: RCW 84.08.070. 09-04-035, § 458-07-030, filed 1/29/09, effective 3/1/09; 00-01-043, § 458-07-030, filed 12/7/99, effective 1/7/00.