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I'm hoping someone can briefly explain Colorado property taxes to me. I am scouring the Internet, looking at possible cities to which I can retire. I understand that property taxes vary from County to County and city to city. But I don't understand some weird things I've discovered. Can someone please take a moment to explain?
1. Why do some $700,000 homes in Estes Park have property taxes of $2100 a year and other $700,000 homes in Estes Park have $8,000 a year property taxes? Neither have much acreage.
2. Some new homes in Golden of $650,000 have $4000 in property taxes and other new homes in Golden have $2900.
3. I've found some homes in Ouray which have only $900 in property taxes and are selling for $650,000. Others in Ouray are $2200.
I am guessing that property taxes vary from parcel to parcel, but there seems to be no rhyme or reason to this. Some old homes have much higher property taxes than some new constructions.
I'd so much appreciate some help on this. Low property taxes is a big reason I am choosing to retire to Colorado. but I'm not understanding the huge variance.
I can give you the short synopsis. First, residential property is valued at fair market value. The TABOR amendment to the Colorado Constitution PROHIBITS the assessor from using the cost or income approach to value the property. Colorado property is reappraised to a new level of value in each odd numbered year (2005, 2007, 2009, etc.). Sales data used to develop a comparable sales database is the 18 month period ending the June 30th of the year preceding the re-assessment year (so, for example, the sales data for tax year 2007 and 2008 is January 1, 2005-June 30, 2006).
Residential property is assessed at 7.96% of its "actual" value as determined by the assessor. To that is applied the local mill levy to get taxes:
Example: $200,000 actual value x .0796 = $15,920 assessed value
$15,920 x mill levy (say, 0.060) = $955.20 Tax
Because the sales data gathering period lags behind the actual assessment date, in a rapidly appreciating market, the current selling prices may exceed considerably what the property is valued by the assessor. Some markets in Colorado have seen appreciation in the last few years of 2% per month or more. Mill levies can vary considerably by location within a county and between counties, too--sometimes as low as the 40's (0.04) or as high as 90 (0.09). Mill levies are set by the local taxing entities, and--contrary to popular belief--the county assessor has no control over setting them. There may also be "special assessments" levied against properties for things like irrigation districts, Tax-Increment-Financing, etc. that may affect the tax amount for a specific property considerably.
This is a very short, simplifed explanation. For more information go to the local county assessor's website, the Colorado Division of Property Taxation website (http://dola.colorado.gov/dpt/index.htm ), or the Colorado Assessors' Association website ( http://www.e-caa.com/ ).
Jazzlover, does the sales comparable gathering period for residential apply to commercial property as well? I was under the impression that you pull comps from the gathering period first then if there are not ones available you can look at older ones. Am I correct?
Thank you!
Quote:
Originally Posted by jazzlover
I can give you the short synopsis. First, residential property is valued at fair market value. The TABOR amendment to the Colorado Constitution PROHIBITS the assessor from using the cost or income approach to value the property. Colorado property is reappraised to a new level of value in each odd numbered year (2005, 2007, 2009, etc.). Sales data used to develop a comparable sales database is the 18 month period ending the June 30th of the year preceding the re-assessment year (so, for example, the sales data for tax year 2007 and 2008 is January 1, 2005-June 30, 2006).
Residential property is assessed at 7.96% of its "actual" value as determined by the assessor. To that is applied the local mill levy to get taxes:
Example: $200,000 actual value x .0796 = $15,920 assessed value
$15,920 x mill levy (say, 0.060) = $955.20 Tax
Because the sales data gathering period lags behind the actual assessment date, in a rapidly appreciating market, the current selling prices may exceed considerably what the property is valued by the assessor. Some markets in Colorado have seen appreciation in the last few years of 2% per month or more. Mill levies can vary considerably by location within a county and between counties, too--sometimes as low as the 40's (0.04) or as high as 90 (0.09). Mill levies are set by the local taxing entities, and--contrary to popular belief--the county assessor has no control over setting them. There may also be "special assessments" levied against properties for things like irrigation districts, Tax-Increment-Financing, etc. that may affect the tax amount for a specific property considerably.
This is a very short, simplifed explanation. For more information go to the local county assessor's website, the Colorado Division of Property Taxation website ([url=http://dola.colorado.gov/dpt/index.htm]Colorado Department of Local Affairs - Division of Property Taxation[/url] ), or the Colorado Assessors' Association website ( [url=http://www.e-caa.com/]Home « Colorado Assessor's Association[/url] ).
^Wrong. The data-gathering period is from January 1 in the odd year to June 30 the following year (18 months). Go here and get the correct information--click on "Understanding Property Taxes":
Is it possible that the OP is only looking at real estate listings showing the taxes paid by the sellers?
Here's where they may be seeing the tax disparity: a property may have an older tax basis and hence lower assessed valuation/tax level, while another property may have had a more recent sale and re-evaluation with a higher assessed valuation.
With a new sale, the lower taxed property would be re-evaluated and likely raised to a tax basis in line with the higher taxed properties.
The only way to know the tax basis on a given property is to head to the County Assessor's office and get the data card info on the property. As I found out in several Colorado county offices, the data card errors are common and the assessor's offices don't necessarily have the updated information on many properties.
For a buyer, seeing a house listing with a significantly lower property tax may be a very misleading experience when they purchase a house and the taxes are raised to a level consistent with the higher taxes of the comparable houses.
Here's where they may be seeing the tax disparity: a property may have an older tax basis and hence lower assessed valuation/tax level, while another property may have had a more recent sale and re-evaluation with a higher assessed valuation.
With a new sale, the lower taxed property would be re-evaluated and likely raised to a tax basis in line with the higher taxed properties.
The only way to know the tax basis on a given property is to head to the County Assessor's office and get the data card info on the property. As I found out in several Colorado county offices, the data card errors are common and the assessor's offices don't necessarily have the updated information on many properties.
For a buyer, seeing a house listing with a significantly lower property tax may be a very misleading experience when they purchase a house and the taxes are raised to a level consistent with the higher taxes of the comparable houses.
That is NOT how the Colorado property tax system works. It does work that way in some other states--not Colorado.
That is NOT how the Colorado property tax system works. It does work that way in some other states--not Colorado.
while you may be correct from the perspective of the legal aspects of "Colorado property tax system works", I KNOW from firsthand experience in Weld, Denver, Larimer, and Eagle Counties that the system doesn't always work according to the letter of the law.
My personal experience was to see the tax bill on my properties and to know the FMV's (via appraisals for other reasons, such as insurance replacement cost, performed by SRPA's and MAI's qualified appraisers) compared to other properties in the neighborhood. I had found out that some of those other properties had assessed valuations significantly lower than mine, hence a substantially lower property tax burden at the same mil levy as I was paying.
I've PERSONALLY visited with the county tax assessors and they've pulled up the "tax card" on the properties I was questioning as to why their assessed valuation was so much less than mine. Effectively, the answer was the same ... "we don't have the resources to verify all of the information which was carried over into our system when we upgraded hardware/software". Even when I showed a county tax assessor pictures of the comparable aspects of the respective properties to mine which showed that either my house was overvalued or that the other house was undervalued, they weren't budging. I wasn't trying to get my neighbors tax bill raised, I was seeking parity for my property tax burden by getting it lowered to a comparable level. If I've got 8 comparable properties to mine all assessed at a lower valuation, then something's out of whack.
It was particularly egregious in unincorporated Weld County, where my house was valued at my purchase price of $325,000 but at least 8 of my neighbor's 5 acre parcels with nicer finished/better functional floor plans/more square footage/more outbuildings were still valued in the low-to-mid $100,000 range from when they'd been built and since occupied by the same owners for 25+ years.
I had one neighbor who'd built two sizable workshops ... at least 1,800 sq ft each on 6" concrete slabs, pole buildings with glue-lam rafters and enough height to store his collection of Class A mobile homes, boats, farm tractors, and other toys ... equipped with permanently installed hoists to lift such vehicles for service. These were heated and fully equipped with an air compressor, 230v heavy power, welding area, fire suppression systems, and air conditioned. He'd built a swimming pool/hot tub spa in the garden level basement of his house leading out to a BBQ patio with a huge brick island center, the type with a full size refrigerator, brick pizza oven, and huge BBQ built-in. His house had been slowly rebuilt and upgraded so that the exterior appeared the same over the years so a "drive-by" assessor's inspection ... which is all that the Weld County Assessor's office would do. And by golly, they weren't going to have me tell them how to do their job. Due to the terrain, you could not see the BBQ patio or the swimming pool/spa from the street view. His house, far nicer with more bathrooms & bedrooms than mine ... had an assessed valuation at around $250,000.
When that house went on the market, it was listed for $425,000 and the Multi-List showed his tax paid on the house. That tax reflected his much lower valuation than my house. It would be reasonable to expect that a new buyer would get caught up by the Weld County assessor's office at the newer sale cost basis. That's what happened to me when I bought my house down the street from this one; I was expecting to pay the same amount in taxes as the seller had paid. My tax bill the next two-year cycle reflected the sale price, not the prior assessed valuation that was much lower.
If this had happened once or twice, I'd think it might have been an rare situation. But I found 7 other properties with similar improvements in my neighborhood that weren't reflected in the assessor's valuation. One of them was really apparent if you'd take a close look at the house, as I did while walking my dog past the place; they never had the three car garage door opened in years and their vehicles were always parked on the pad outside the house. One day the sunlight was just perfect to illuminate through the window panes (much faded plastic) of the garage doors. It revealed that they'd built an interior wall just behind those garage doors; ie, they'd finished out another 800 sq ft of useable (and taxable finished space) on a house that was a slab-on-grade ranch house of 1,500 sq ft. I'd call that a substantial alteration to the house, but again not obvious if all you did was a drive-by appraisal. Which was all Weld County was going to do.
Yet another neighbor, who'd been the GC on his two-story house with 30% more sq footage than my ranch built over an unfinished crawl space ... was assessed at a lower valuation than my house. He'd been there almost 30 years at the time. When I listed my house for sale, he bought some of my shop equipment that I wasn't going to move. So he invited me into his "office" to get my check for the stuff. His "office" was the basement level of his house, completely finished to a very high level, suitable for having clients for his manufacturer's rep business come visit him, or for an associate or two to have a Class A desk/office space. This should have been included in the taxable finished square footage of his house, but it wasn't. Again, without a physical inspection of the house, a drive-by appraiser would have no idea that the finished house was 1/3 larger than on the tax records. With so many home-based businesses in this particular subdivision, his business activity wasn't a concern to the neighbors ... we were all on 5-acre or larger parcels.
I've had the same situation occur in other counties around Colorado. I wind up every two years having to fight Eagle County over their way-out-of line assessed valuation on one of my SFH's there. They automatically reject every 1st round appeal request, so you have to take your contested valuation to the next level. I've had to go to the final appeal level several times before getting an adjustment. I'm not fighting over a $25,000 valuation discrepancy, I've had adjustments of $150,000 to over $200,000 on the assessed valuation. But when the next assessor cycle comes through, it's like starting over again. It's a big enough game in Eagle county that a couple of CPA's specialize in flat-rate assessor appeals ... based upon the valuation, you pay a flat rate for them to investigate your property and then to appeal the assessor's valuation. I get their flyers every two years to coincide with the new assessor cycle, soliciting my business to appeal my latest valuation and reminding me of the tight deadlines to appeal them.
Sorry, JazzLover ... but I've been down this path way too many times over the last 5 decades in Colorado to know that unless you're in a cookie-cutter subdivision where the housing prices are relatively uniform for a given builder model of house and there isn't much variation in the sq footage and amenities ... that the assessor's offices in Colorado aren't necessarily yielding an equitable outcome. And I've paid many thousands of dollars out over the years to challenge those inequities. Sometimes I've had significant adjustments, sometimes the assessor's office has been able to find the comps that supported most of their appraisal. For the most part, I've found that it's a game that the assessor's offices play to maximize tax revenues; ie, if they overvalue a number of properties by 10-12%, is it worth the potential property tax savings to go fight them every two years? I think they plan on most folks not contesting the valuations, so it's found money to the county. But when you're playing in the realm of 7-figure properties, 10% overvaluation becomes a significant chunk of change. Or when you're seeing a 30% plus disparity in comparable houses, it's again an inequity that bears attention. The OP is seeing the results of the system in action.
while you may be correct from the perspective of the legal aspects of "Colorado property tax system works", I KNOW from firsthand experience in Weld, Denver, Larimer, and Eagle Counties that the system doesn't always work according to the letter of the law.
My personal experience was to see the tax bill on my properties and to know the FMV's (via appraisals for other reasons, such as insurance replacement cost, performed by SRPA's and MAI's qualified appraisers) compared to other properties in the neighborhood. I had found out that some of those other properties had assessed valuations significantly lower than mine, hence a substantially lower property tax burden at the same mil levy as I was paying.
I've PERSONALLY visited with the county tax assessors and they've pulled up the "tax card" on the properties I was questioning as to why their assessed valuation was so much less than mine. Effectively, the answer was the same ... "we don't have the resources to verify all of the information which was carried over into our system when we upgraded hardware/software". Even when I showed a county tax assessor pictures of the comparable aspects of the respective properties to mine which showed that either my house was overvalued or that the other house was undervalued, they weren't budging. I wasn't trying to get my neighbors tax bill raised, I was seeking parity for my property tax burden by getting it lowered to a comparable level. If I've got 8 comparable properties to mine all assessed at a lower valuation, then something's out of whack.
It was particularly egregious in unincorporated Weld County, where my house was valued at my purchase price of $325,000 but at least 8 of my neighbor's 5 acre parcels with nicer finished/better functional floor plans/more square footage/more outbuildings were still valued in the low-to-mid $100,000 range from when they'd been built and since occupied by the same owners for 25+ years.
I had one neighbor who'd built two sizable workshops ... at least 1,800 sq ft each on 6" concrete slabs, pole buildings with glue-lam rafters and enough height to store his collection of Class A mobile homes, boats, farm tractors, and other toys ... equipped with permanently installed hoists to lift such vehicles
for service. These were heated and fully equipped with an air compressor, 230v heavy power, welding area, fire suppression systems, and air conditioned. He'd built a swimming pool/hot tub spa in the garden level basement of his house leading out to a BBQ patio with a huge brick island center, the type with a full size refrigerator, brick pizza oven, and huge BBQ built-in. His house had been slowly rebuilt and upgraded so that the exterior appeared the same over the years so a "drive-by" assessor's inspection ... which is all that the Weld County Assessor's office would do. And by golly, they weren't going to have me tell them how to do their job. Due to the terrain, you could not see the BBQ patio or the swimming pool/spa from the street view. His house, far nicer with more bathrooms & bedrooms than mine ... had an assessed valuation at around $250,000.
When that house went on the market, it was listed for $425,000 and the Multi-List showed his tax paid on the house. That tax reflected his much lower valuation than my house. It would be reasonable to expect that a new buyer would get caught up by the Weld County assessor's office at the newer sale cost basis. That's what happened to me when I bought my house down the street from this one; I was expecting to pay the same amount in taxes as the seller had paid. My tax bill the next two-year cycle reflected the sale price, not the prior assessed valuation that was much lower.
If this had happened once or twice, I'd think it might have been an rare situation. But I found 7 other properties with similar improvements in my neighborhood that weren't reflected in the assessor's valuation. One of them was really apparent if you'd take a close look at the house, as I did while walking my dog past the place; they never had the three car garage door opened in years and their vehicles were always parked on the pad outside the house. One day the sunlight was just perfect to illuminate through the window panes (much faded plastic) of the garage doors. It revealed that they'd built an interior wall just behind those garage doors; ie, they'd finished out another 800 sq ft of useable (and taxable finished space) on a house that was a slab-on-grade ranch house of 1,500 sq ft. I'd call that a substantial alteration to the house, but again not obvious if all you did was a drive-by appraisal. Which was all Weld County was going to do.
Yet another neighbor, who'd been the GC on his two-story house with 30% more sq footage than my ranch built over an unfinished crawl space ... was assessed at a lower valuation than my house. He'd been there almost 30 years at the time. When I listed my house for sale, he bought some of my shop equipment that I wasn't going to move. So he invited me into his "office" to get my check for the stuff. His "office" was the basement level of his house, completely finished to a very high level, suitable for having clients for his manufacturer's rep business come visit him, or for an associate or two to have a Class A desk/office space. This should have been included in the taxable finished square footage of his house, but it wasn't. Again, without a physical inspection of the house, a drive-by appraiser would have no idea that the finished house was 1/3 larger than on the tax records. With so many home-based businesses in this particular subdivision, his business activity wasn't a concern to the neighbors ... we were all on 5-acre or larger parcels.
I've had the same situation occur in other counties around Colorado. I wind up every two years having to fight Eagle County over their way-out-of line assessed valuation on one of my SFH's there. They automatically reject every 1st round appeal request, so you have to take your contested valuation to the next level. I've had to go to the final appeal level several times before getting an adjustment. I'm not fighting over a $25,000 valuation discrepancy, I've had adjustments of $150,000 to over $200,000 on the assessed valuation. But when the next assessor cycle comes through, it's like starting over again. It's a big enough game in Eagle county that a couple of CPA's specialize in flat-rate assessor appeals ... based upon the valuation, you pay a flat rate for them to investigate your property and then to appeal the assessor's valuation. I get their flyers every two years to coincide with the new assessor cycle, soliciting my business to appeal my latest valuation and reminding me of the tight deadlines to appeal them.
Sorry, JazzLover ... but I've been down this path way too many times over the last 5 decades in Colorado to know that unless you're in a cookie-cutter subdivision where the housing prices are relatively uniform for a given builder model of house and there isn't much variation in the sq footage and amenities ... that the assessor's offices in Colorado aren't necessarily yielding an equitable outcome. And I've paid many thousands of dollars out over the years to challenge those inequities. Sometimes I've had significant adjustments, sometimes the assessor's office has been able to find the comps that supported most of their appraisal. For the most part, I've found that it's a game that the assessor's offices play to maximize tax revenues; ie, if they overvalue a number of properties by 10-12%, is it worth the potential property tax savings to go fight them every two years? I think they plan on most folks not contesting the valuations, so it's found money to the county. But when you're playing in the realm of 7-figure properties, 10% overvaluation becomes a significant chunk of change. Or when you're seeing a 30% plus disparity in comparable houses, it's again a inequity that bears attention. The OP is seeing the results of the system in action.
Very informative real world based vs theory summation as to the actuality of assessed value. Way too often I have even seen exact same condo units adjacent to one another with as much as a five thousand dollar differential regardless of how dynamic the market is or how long the lag time is between sales and recording of transaction with County.
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Sales Comps
