November 2016 Personal Property Manual for Washington State 1 8
In some instances, leasehold improvements are assessed as real property because the
improvements are of a permanent nature and remain with the lessor at the end of the lease.
Generally, if the Marshall & Swift manual is relied upon for real property valuation, the cost
factor accounts for basic floor covering, electrical, plumbing, air conditioning, and heating. All
of these are common items listed as leasehold improvements.
Consideration should be made for signs, specialized wiring for machinery, light fixtures, and
foundations for machinery as these items should be assessed as personal property. When at all
possible, the owner should supply an itemized list so that the personal property appraiser can
coordinate with the real property appraiser. The lease may be reviewed to determine how the
improvements are classified, i.e., real or personal property. If at the time of lease expiration, the
ownership of the leasehold improvements transfers to the lessor, assess the leasehold
improvements as real property at that time. If at the time of lease expiration, the lessee retains
ownership (usually being required to remove those improvements to return the real property to
its original condition), assess the leasehold improvements as personal property.
However, assess unique tenant improvements that no other future tenant could or would use as
personal property—even when they are affixed or when ownership of those improvements
transfers to the lessor. Tenant-specific improvements rarely add value to the real property even
if they are left behind when the tenant vacates. Nevertheless, the tenant does benefit from those
improvements during the term of the lease; therefore, they are regarded as personal property.
Additionally, if the improvement's life is less than the lease term, the lessee owes personal
property tax. Improvements on public lands are always personal property.
The approach used to value leasehold improvements as real property should be in accordance
with similar real property in your county. Value these assets as personal property based on the
specific item and/or the life of the asset. This allows for uniformity and equalization.
1.13 Filing Deadline
Personal property must be listed by the taxpayer and filed with the county assessor on or before
April 30. A postmark on or before April 30 is also acceptable.
Before January 1 each year, the assessor must mail, or electronically transmit, a listing form to
persons at their last known address. Even if the assessor fails to send the listing form to the
taxpayer, the taxpayer is still required to file the listing by the deadline. (RCW 84.40.040.)
Every individual, corporation, limited liability company, association, partnership, trust, or estate
shall list all personal property in his or its ownership, possession, or control which is subject to
taxation pursuant to the provisions of this title. (RCW 84.40.185.)
1.14 Filing Penalty
A penalty of 5 percent of the amount of tax (not to exceed $50 per calendar day) is assessed for
each month the listing is late. The maximum penalty is 25 percent. If the taxpayer fails to file a
listing form due to reasonable cause and not due to willful neglect, the penalty may be waived.
(RCW 84.40.130.) A reasonable cause policy is recommended to ensure fairness. Willful failure