Over the next several blog posts, we are going to be addressing a series of expense line items that apartment owners incur such as property insurance, maintenance and repairs, and utilities. We will also discuss how we can improve the bottom line for owners.
The first line item we are addressing is property taxes. Property taxes in the state of Washington are calculated using the following formula:
(Assessed Value / $1,000) X Levy Rate = Annual Property Taxes
Spokane County has 179 different levy rates they use to determine annual property taxes. Information on your specific parcel in Spokane County can be found by visiting SCOUT and searching for your parcel/address.
There are Multifamily property tax exemptions for qualifying projects throughout the city of Spokane. The city has two goals with this incentive:
- To encourage more market rate units throughout low income areas
- To encourage more affordable units in areas that are not economically distressed (8, 12, and 20 year property tax exemptions available).
Information on where these exemptions are available and how to apply for them can be found here.
Property taxes have risen significantly over the past few years. For example, one of our owners saw their property taxes increase from $35,000 in 2021 to over $50,000 in 2024. To mitigate these costs this owner chose to join the city’s historical registry and received a 10 year property tax reduction based on improvements to the property. Information for how to apply for a grant from the historic registry is available here.
For buyers looking to purchase multifamily properties, it is important to note that assessed values typically jump significantly the year after a sale. When we underwrite apartment complexes we typically use a 45% expense ratio which includes the anticipated increase in property taxes.
Please reach out if you need assistance underwriting any properties you are looking to purchase!
SVN Cornerstone Multifamily Team
Nate Gant is an Advisor with SVN Cornerstone. Nate has been an active member of the Eastern Washington real estate community since 2010. He has brokered more than $100 Million in real estate transactions, specializing in land development, REO and investment properties. To get in touch with Nate, email nate.gant@svn.com or call 509.993.4440.
Jordan Lester is an Associate Advisor with SVN Cornerstone. Jordan served as a brokers assistant for 3 years with SVN Cornerstone before becoming a full time broker. Jordan specializes in the multifamily sector of commercial real estate. To get in touch with Jordan, email jordan.lester@svn.com or call 509.496.6922