Why Do Colorado Property Taxes Vary So Much?

A reader recently asked why property taxes vary so much, particularly since the state constitution requires that all property taxes be based on full valuation based on actual sales of comparable properties.

The biggest discrepancy arises from the taxing of non-residential property at four times the rate of residential property.

Let’s say you buy a vacant lot valued by the assessor at $200,000. Until that lot has a house on it, the assessed (i.e., taxable) valuation is 29% of $200,000, or $58,000. At 100 mills, (a typical mill levy), the annual tax on that vacant land would be $5,800.

Now let’s say you build a house on the lot, increasing the market value by an additional $200,000, for a total of $400,000. Because it’s now considered a residential parcel, the assessed valuation is only 7.2% of $400,000, or  $28,800. At 100 mills, the annual tax on that residential parcel would now be only $2,880.

The other big discrepancy is in new subdivisions where the developer creates a “metropolitan tax district” which issues bonds to pay for infrastructure work – sewers, sidewalks, streets, gutters, etc.  To pay off those bonds, a mill levy, typically about 50 mills, is assessed on all the parcels in that subdivision.  If the usual tax is 100 mills, that’s a 50% increase in property taxes compared to homes not in that tax district.

Author: Golden Real Estate, Inc.

Golden Real Estate is a prominent member of the Denver/Jefferson County real estate scene. Based in Golden, we service both Denver and Jeffco, representing both buyers and sellers. We're well known for Broker Jim Smith's weekly "Real Estate Today" column published in the Denver and Jeffco editions of the Denver Post's YourHub section each Thursday. The column also appears in several weekly newspapers and is archived at www.JimSmithColumns.com. We have nine agents, all of whom are Realtors and EcoBrokers. Our office is solar powered and several of us drive electrics cars. Known for our sustainable practices, we accept polystyrene (aka "Styrofoam") for recycling, keeping 200 cubic yards per year out of area landfills.

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