Appeals involving new construction
The Assessor is authorized to value new construction and renovation work each year based on its status—stage of completion—as of July 31st of the assessment year. Appeals involving new construction typically fall into two categories; 1) appealing the Assessor’s estimated stage of completion as of the July 31st new construction status date, and/or 2) appealing the Assessor’s improvement value determination. Because the Assessor’s staff cannot be at each property with permit activity on July 31st, they have to project the percentage complete based on standardized construction completion tables. Documentation such as actual costs in place, permit inspections, and/or photographs that demonstrate the stage of completion on July 31st are effective forms of evidence when challenging the Assessor’s percentage complete estimate.
If you’re appealing the Assessor’s new construction value determination, a cost approach that includes documented actual costs of the improvement (building) may be useful. Such a cost analysis should include all expenditures, including; the value of labor performed by you; contractors’ fees, material costs, permits, architectural fees, plans, sales taxes, etc. Also, within the cost approach, entrepreneurial profit, depending on market forces, should be considered.
Keep in mind that while a cost analysis is a reasonable approach when valuing new construction, the Revised Code of Washington sets forth sales of the property under review or comparable sales as the preferred criteria for determining fair market value.