Understanding Property Taxes in Colorado: A Comprehensive Guide
Property taxes have always been a crucial aspect of homeownership, yet they remain one of the most misunderstood components. With property tax notices possibly surprising homeowners in Colorado, it’s the perfect opportunity to delve into what property taxes are, how they are calculated, and how to dispute them if necessary.
What are Property Taxes?
Property taxes are annual payments made by homeowners based on the assessed value of their property. They are a primary source of revenue for local governments, funding public schools, county governments, special districts, municipal governments, and junior colleges. It’s crucial to note that all revenue generated by property taxes stays within your county and does not fund any state services.
The county assessor is tasked with discovering, listing, classifying, and valuing all property within the county in compliance with state laws. The goal is to establish accurate values for all properties, ensuring that the tax burden is fairly distributed among all property owners. Real property is revalued every odd-numbered year, while personal property is revalued annually.
Components of Property Tax Calculations
Property tax calculations involve several components:
- Property classification
- Actual value of the property
- Assessment rate
- Assessed value
- Tax rate
Residential Tax Rate and Calculation
For single-family residential properties, the current assessment rate is 6.765% of the market value. The tax rate, often expressed as a mill levy, is calculated based on the revenue needed from property tax and the total assessed value of the property within the taxing authority’s boundaries.
For instance, if the revenue from property tax is $1,398,000 and the total assessed value is $100,000,000, the tax rate is 0.013980 (or 13.980 mills).
Calculating Assessed Values and Property Taxes
The assessed value is obtained by multiplying the actual value of the property by the appropriate assessment rate. For example, if the actual value of a single-family residence is $275,000, the assessed value is $18,603.75 ($275,000 x 0.06765).
Property taxes are then calculated by multiplying the assessed value by the tax rate. Using the assessed value from the previous example and a tax rate of 0.075541, the taxes due would be $1,405.35 ($18,603.75 x 0.075541).
Notice of Evaluation
Real Property Notices of Valuation are mailed by May 1 each year, while Personal Property Notices are mailed by June 15. They list the location, classification, pertinent characteristics to value, and the actual value of the property for both the prior and current years.
Protesting and Appealing Valuations
If a homeowner disagrees with the actual value or classification placed on their property, they can present oral or written objections to the assessor. Deadlines for these protests are June 8 for real property and June 30 for personal property.
Should the homeowner be unsatisfied with the assessor’s decision, they may appeal to the county board of equalization. The deadlines for these appeals are July 15 for real property and July 20 for personal property. If the homeowner still disagrees with the county board’s decision, they can appeal to an arbitrator, district court, or the Board of Assessment Appeals within 30 days of the decision being mailed.
Understanding how property taxes work is essential for homeowners. While the recent increases in property taxes might be shocking, being informed about how they’re calculated and how to appeal them could mitigate the impact. As a real estate professional, I’m here to guide you through this process and help you better understand your property taxes. Please feel free to contact me anytime for additional information, questions or help strategizing an appeal.