The brokers at Golden Real Estate are ready to provide you with the qualified sales that you can use in your appeal, including their time adjusted sale prices. Call 303-302-3636 and enter the 3-digit code for the broker you want to help you. Or email your request to jim@goldenrealestate.com.
Tag: Property Taxes
This Week Property Owners Received Notices of Valuation From Their County Assessor
Note: This article is focused on the City and County of Denver. You can find three other versions focused on other counties — one for Jefferson County, one for Aurora/Adams County, and one for Douglas and Arapahoe Counties — in PDF form at www.JimSmithColumns.com.
During the first week of May in every odd numbered year, Colorado’s county assessors are required to inform every property owner of the full valuation that they have assigned to each property. Unless revised downward through the state-mandated appeal process, that valuation will be the basis of the property tax charged for this year and for 2024.
The valuation you received by letter is the assessor’s best guess as to what your property might have sold for on June 30th of the previous (even-numbered) year. That assumes, however, that the condition of your home is the same on Jan. 1st of this year and next year as it was on June 30th of last year. If your house is bigger or smaller on January 1st, that year’s valuation and therefore your property taxes must be adjusted accordingly.
The system actually depends on your participation in correcting the assessor’s valuation, which was the result of a computer-driven “mass appraisal” system, because there’s no way for the assessor’s staff of human appraisers to create a valuation of every home in the City & County of Denver. Those appraisers will, however, read or listen to your appeal of the valuation which their system generated for your home.
Bottom line, therefore, is that you owe it to yourself and to the county to help the assessor come up with the proper valuation for your home. So how do you do that?
For non-residential and commercial properties, which pay roughly four times the property tax per $100,000 valuation, a whole industry has arisen to help property owners (for a fee) to appeal their property tax valuation.
Residential taxes are so much lower in Colorado that there’s not enough profit for professionals to make, leaving residential homeowners to fight their own battle for lower valuations and therefore lower property taxes.
The county assessors are expected to make it easy for taxpayers to determine whether the assessor guessed correctly at their home’s value as of June 30, 2022. Your first step is to find your home at www.denvergov.org/property/. Note that after you enter your address, you may need to scroll down to see and click on your address. (I mistakenly thought the website was defective and not responding.)
Once you’re on your home’s web page you’ll see a tab “Neighborhood Sales” which lists all the qualified sales that occurred during the eligible period, which is the 24 months prior to June 30, 2022.
Don’t make the mistake of thinking that a home which sold after June 30, 2022 (not shown, by the way, under that tab), can be used in your appeal. You may only cite comps which sold during that 24-month period ending June 30, 2022.
To make the list of sales useful, click on the “Square Footage” header to find homes similar in size to yours. Once you find good comps to use in your appeal, you need to “time adjust” their sale prices.
Time adjustment is based on how much Denver homes increased in value during those 24 months. The Denver assessor has announced that the percentage increase in values from June 30, 2020, to June 30, 2022, for the City & County of Denver is 33%. Divide that by 24 months, and the increase in value for residential properties in Denver was 1.375% per month.
So, if a sale occurred six months prior to June 30, 2022, you need to increase its sale price by six times 1.375%, which computes to 8.25%. That “time adjusted” price is what you need to cite in your appeal.
Note: If, by chance, you bought your home on June 30, 2022, don’t assume that your purchase price will be the assessor’s valuation of your home, because, regardless of what you paid for your home on June 30, 2022, its valuation is based on what eligible comps indicate it should have sold for. Your home would be only one of several comps used by the assessor to value your home.
Using the procedure described above, if you find your home was overvalued, you need to protest using an online form that is under the “Assessment Protest” tab on your home’s web page, where you can log in as “Guest.”
Your appeal is due in the assessor’s office by June 8, 2023. You can mail or fax your protest, but I recommend an in-person meeting, which you can request by calling 720-913-4164. The assessor’s office is on the 4th floor of the Wellington Webb Municipal Building, 201 W. Colfax Ave., and is open from 8am to 3pm.
If your protest is rejected, the appeal options are explained well on the Notice of Valuation letter which you received in the mail.
Proposal to Reduce Property Taxes Shouldn’t Affect Effort to Obtain the Correct Valuation of Your Home
You may have read that the General Assembly will be putting a proposal on the November ballot which would reduce your property taxes by reducing the valuation of your home by $40,000.
If your home is valued by the assessor at $400,000, your tax will be based on a value of $360,000, resulting in a 10% reduction in your property tax burden. If your home is worth $4 million, that $40,000 reduction results in a 1% reduction in your tax burden. Last year that discount was set at $15,000.
There’s also talk of reducing the assessment rate, which is currently 6.765%. That means that a home with a $1 million value has an “assessed value” of $67,650, against which the mill levy is applied.
The typical Colorado mill levy is around 100 mills which means that before those two discounts, the tax on a million-dollar home would be $6,765. With the million dollar value already reduced by $15,000, the tax is lowered by $101.47. With the $40,000 discount, the tax would be lowered by an additional $169.13.
Heads Up for Homeowners: Property Valuations by Your County Assessor Are Coming in Early May
Colorado’s constitution dictates that in May of every odd-numbered year, each county assessor must provide every property owner with a “Notice of Value” of their real estate as of June 30th of the previous year.
Your property taxes for 2023 (due next spring) and for 2024 will be based on that valuation, so you may want to appeal that valuation by the June deadline. As I have done in this column every other year for the past two decades, I will publish a guide for how to determine whether you have a case for reducing your valuation and the most successful way to submit it.
Check www.JimSmithColumns.com for what I wrote in May 2021 and May 2019 to see that process, which may require some updating when I publish it next month.
Follow-up on Last Week’s Post About Property Tax and Sales Tax
I did a lot of research for last week’s column about property taxes in incorporated vs. unincorporated areas, but I should have done more research about sales taxes.
Instead of researching sales taxes in various counties, including Jefferson, I simply said that “I don’t know of” any county-wide sales taxes. Oops!
I am well aware of the 1/2 percent Jefferson County sales tax which has funded our wonderfully extensive open space parks.
A couple readers did some research for me, and I got the following list of sales taxes in other counties. I’m not including Denver and Broomfield counties because those are city sales taxes and there are no unincorporated areas (that I know of) in those two city/counties.
Reader Gary Justus wrote that all metro counties except one have a county-wide sales tax, according to https://colorado.ttr.services:
- Jefferson County – 0.50%
- Adams County – 0.75%.
- Douglas County – 1.00%
- Arapahoe County – 0.25%
- Boulder County – 0.985%
- Clear Creek County – 2.65%
- Elbert County – 1.00%
- Gilpin County (none)
Most counties beyond the metro area do, in fact, have sales taxes, some of them substantial, such at Pitkin County (3.6%), San Juan County (6.5%), and Jackson & Lake Counties (4% each).
Colorado Department of Revenue Publication 1002 spells out the sales taxes which it collects for local jurisdictions. Some, like Golden, aren’t listed, because they collect their own sales taxes.
Sales Taxes May Be Lower, but Property Taxes Are Usually Higher in Unincorporated Areas
It’s a common misconception that taxes are lower in unincorporated areas of each county, but that only applies to sales tax. I don’t know of any unincorporated area where property taxes are lower than they are in incorporated cities and towns.
Moreover, newer subdivisions in unincorporated areas typically have “metropolitan tax districts” that were created by the developer to pay for infrastructure — streets, gutters, sidewalks, water and sewer mains, etc. — which can make property taxes quite a bit higher than in the older areas of incorporated cities and towns.
Compare, for example, the mill levy for the City of Golden with the multiple mill levies in unincorporated areas of Jefferson County.
In Jeffco’s oldest incorporated city, Golden, the city’s mill levy is only 12.34 mills. (The total mill levy for Golden is 85.389, the rest being for county government and for Jeffco Public Schools.)
In those homes which are not in the City of Golden but have Golden addresses, the mill levies to provide the same services (police, fire, parks, water and sewer infrastructure, etc.) are always higher. A good example is Mesa View Estates, the 1980s neighborhood behind the Jeffco Fairgrounds. Homes in that neighborhood have mill levies from four tax jurisdictions to provide the same services that are included in the City of Golden’s single mill levy.
Those four mill levies are: water & sanitation (6.786 mills); parks & recreation (6.829 mills); County sheriff (2.46 mills); and fire protection (13.196 mills). That’s a total of 29.271 mills, or over 2⅓ times what the City of Golden collects to provide the same services.
Thus, a $1 million home in the City of Golden would have an annual property tax bill of $5,934, whereas a $1 million home in Mesa View Estates would have an annual property tax bill of $7,042.
It’s even worse for homes in the Table Rock subdivision north of Golden but with Golden addresses. There the mill levy for police, fire, parks and water totals 18.447 (less than in Mesa View Estates), but there’s a levy of 31 mills by the Table Rock Metropolitan District, raising the annual property tax bill to $8,513.
There are many newer subdivisions with metropolitan tax districts which charge 50 or more mills, making the property tax bills that much higher. The most extreme example I have found is the Vauxmont Metropolitan Tax District serving Candelas in northern Arvada. Its mill levy is 77.93, making the annual tax bill for a $1 million home $12,142. Again, compare that to the $5,934 tax bill for a $1 million home in the City of Golden.
Candelas, however, is in the City of Arvada, not unincorporated Jeffco. Older sections of Arvada, such as Scenic Heights, do not have metropolitan tax districts, but they do have separate mill levies for fire protection and for parks and recreation districts. Similarly, Lakewood wasn’t incorporated until 1969, by which time there were multiple fire, water and parks districts already charging a mill levy. Still, the total mill levy in both Arvada and Lakewood — minus any metropolitan tax districts — is under 100 mills. Virtually all unincorporated areas of the county have total mill levies that are above 100.
Denver’s mill levy of 74.618 mills is even lower than Golden’s, although there are some metropolitan tax districts within Denver, such as Westerly Creek in Central Park (formerly Stapleton), which charges 60.867 additional mills.
As a side note, I sit on the Rules & Regulations Committee of our MLS and have suggested, without success so far, that listings in REcolorado include the mill levy instead of, or in addition to, the dollar amount of property taxes.
Sales taxes can only be levied by incorporated cities and towns and by state-constituted districts such as RTD and SCFD. I’m not aware of any county-level sales taxes. If you buy a truck or car worth, say, $100,000, you could easily save $3,000 in sales tax by registering it in an unincorporated area of the county, but that may not be enough to compensate for the additional property taxes you will be paying.
By the way, property tax is also levied as “ownership” tax on that $100,000 truck or car.
How Are Property Taxes Calculated in Colorado?
Property taxes are charged through a mill levy. Each “mill” (from the Latin word for thousand) is a tax of one dollar for each thousand dollars of your home’s assessed valuation.
In Colorado, the assessed value of residential real estate is currently calculated at 6.95% of the home’s full valuation. Thus, if the county assessor determines that your home is worth $1 million, its assessed valuation would be $69,500, and the mill levy for each taxing jurisdiction would be applied to that lower value, A mill levy of 100 mills would thus produce a property tax bill of $6,950 (which is 100 x 69.5)
The Colorado constitution requires county assessors to determine what each property could have sold for on June 30th of each even-numbered year (2020, 2022, 2024, etc.) and apply mill levies to 6.95% of that full valuation for the following two tax years.
Property Tax Increases for 2023 / 2024 Will Be Limited by TABOR in Some Jurisdictions
A couple weeks ago in this column, I warned homeowners that the current rise in home values means a proportionate increase in property valuations as of June 30, 2022, and therefore a likely rise in property taxes for 2023 and 2024.
I wrote that because of a typical 30% increase in what your home could have sold for on June 30, 2022, versus June 30, 2020, your property taxes could increase by 30%, but that didn’t take into account the effect of the Taxpayer Bill of Rights, or TABOR, which restricts how much revenue each tax jurisdiction can keep to population growth plus the increase in the cost of living.
Under TABOR, if a taxing jurisdiction collects more than that formula allows, it must refund the excess to the taxpayers.
However, many (but not all) jurisdictions obtained voter approval to keep any excess revenue. The term for this common ballot measure is “de-Brucing,” after Douglas Bruce, the author of TABOR.
All but two counties passed such ballot measures and won’t have to refund their excess revenues to taxpayers — or, more commonly, reduce their mill levies so they only collect the allowed amount of revenue. Jefferson County is one of those counties that has not de-Bruced, so Jeffco will likely reduce its mill levy for 2023 and 2024 to limit their property tax revenue despite the increase in valuations.
In any county, however, the biggest mill levy is that of the school district, and, again, most school districts, including Jeffco’s, have de-Bruced and can enjoy the coming windfall in revenue by not reducing their mill levies.
Any given property’s mill levy is the sum of individual mill levies from multiple taxing jurisdictions. You can see all those mill levies by looking for your property on the country assessor’s website. For example, in Jeffco, you’d go to http://propertysearch.jeffco.us. In other counties, just Google the county’s name + “assessor.”
For any given address, you’re likely to find between 5 and 15 different jurisdictions with individual mill levies. In unincorporated areas of Jefferson County, for example, you’ll find separate mill levies for the county, for Jeffco schools, for the country sheriff (“law enforcement”), for your local water district, local park district, local fire district, RTD, storm water and flood control district, etc.
As an aside, a lot of people think that “unincorporated” translates to lower property taxes, but the opposite is true. Consider the following: the West Metro Fire District, serving much of Lakewood, collects about 13.2 mills from property owners in its taxing district — and that’s just for fire protection. Meanwhile, the City of Golden’s current mill levy is less than that (12.34 mills) and includes all municipal services — fire, police, parks and recreation, and more. Golden may have higher real estate prices, but our real estate is taxed at a lower rate than in most other areas.
The Current Surge in Sold Prices of Homes Will Cause a Jump in 2023-2024 Property Taxes
In Colorado, property taxes are based on a calculation of what each property might have sold for on June 30th of the prior even-numbered year.
That means the property taxes for 2023 and 2024 will be based on what your home could have sold for on June 30, 2022. Given the crazy surge in home prices, you could see a 30% or higher jump in your property’s assessed valuation and therefore a 30% or higher jump in your property taxes for the next two years.
The chart below shows the likely impact of the current run-up in median prices compared to the median prices in prior Junes of even-numbered years, based on data from REcolorado. Although your home’s valuation will be based on the sales of comparable homes near yours leading up to June 30, 2022, the fact that the median sold price of residential properties metro-wide will have increased by over 30% from June 30, 2020, suggests that your home’s valuation and therefore your taxes could rise by 30 percent or more.
I’ve estimated (conservatively) that the median sold price in June will be $570,000 because the median sold price was already $540,000 in February. That is already a 27.7% increase over June 2020.
That, however, is an average for the entire Denver metro area, defined for these purposes as within 25 miles of the state capitol. There are locales within the metro area where the increase in values over the last two years have approached 35% or more. Here is how that metro-wide 27.7% average increase of Feb. 2022 over June 2020 breaks down by county:
Denver County—19.5%
Jefferson County—30.1%
Douglas County—31.9%
Adams County—28.6%
Arapahoe County—27.1%
Boulder County—40.7%
Gilpin County—42.4%
The appreciation also varies greatly by city addresses:
Golden addresses—15.9%
Littleton addresses—26.0%
Arvada addresses—33.0%
Broomfield—27.2%
Centennial—36.9%
Aurora—30.5%
Highlands Ranch—31.8%
Castle Rock—36.5%
So, keep an eye on what homes like yours are selling for this April, May and June of this year to get a sense of what the county assessor’s valuation of your home will look like when you get that notification in May 2023.
About 50 readers are receiving “neighborhood alerts” from me. These are email alerts regarding all MLS listings within your particular neighborhood. Usually, the alerts cover a certain subdivision or ZIP code, but they could be structured to include only listings which are comparable to your own home. For example, if you have a 1970s ranch home, I could set up an alert that only includes ranch-style homes built between 1960 and 1990 within a half mile or mile of your home. This will give you the best indication of how the value of your own home may be calculated by your county assessor. Feel free to email me at my address below to request such an alert or to modify the alert I am already sending you.
Here’s Some Guidance on Appealing the County Assessor’s Valuation of Your Home
Normally, I’d advise you to make your appeal in person, but this year the Jeffco Assessor is using Covid-19 as a reason to deny in-person appeals, and the online method being offered at his website, http://assessor.jeffco.us, is not as intuitive or helpful as it was two years ago.
This year, instead of sending a full-size letter to each property owner, the Jeffco assessor sent a fold-over postcard which only asks you to provide your own dollar valuation of your home and state a reason. The full-size letter of prior years had a place to enter up to three qualified comparable properties sold during the 24 months prior to June 30 of last year which justify your lower valuation of your property. That letter-size form can be downloaded and printed from the assessor’s website. I’ve posted a link for both the Jeffco and Denver appeal forms at www.JimSmithColumns.com.
Both counties allow for online appeals, but the online forms do not have a place to enter the “Qualified Sales” on which your appeal is based, which is surprising and disappointing. However, you can print out the letter-size Jeffco form with those three comps and attach it as a scanned document to your online filing. The Denver form can be completed online, so you don’t have to print it out and scan it.
You can find those qualified comps (defined as homes similar to yours sold in the 24 months between 7/1/2018 and 6/30/2020) by clicking on the “Sales” tab on the web page for your own home on the assessor’s website. Good luck!
This Week Homeowners Received Updated Valuations From the County Assessor
Taxes in Colorado can’t be raised without a vote of the people, so why do your property taxes go up every other year? The answer is simple — while the rate of taxation (the “mill levy”) can’t be increased without a vote of the people, the valuation of your home does go up based on the market, thereby raising your property taxes.
Unlike many states (for example, California), Colorado’s constitution requires that property taxes be based on the full valuation of the property. It is not based on what you paid for your house, but on what it might have sold for on June 30 of every even numbered year based on the actual sales of comparable homes in your neighborhood, with “neighborhood” defined by type of home, not just locale. One example in Golden is “high end townhomes” and skips around a wide swath of north and south Golden proper.
While the full valuation of your home for next year’s tax bill may be based on what it would have sold for on June 30th of last year, that valuation is based on what your home was like on January 1st of this year. So, if you made a major improvement since last June that was completed by January 1st and that was permitted (the only way the assessor knows about it), your valuation would be based on what your improved home would have sold for last June!
Fortunately, since the valuation of your home is based on what it would have sold for on June 30th of last year, that valuation does not reflect the extreme bidding up of home prices we have seen since last June.
The mill levy for your home is not applied to that full valuation but to 7.15% of it. That’s called the “assessed valuation.” As a quick and easy example, if your home is worth $1,000,000, the assessed valuation is $71,500, and if your mill levy is 100 mills, your tax for 2021 and 2022 for that million dollar home would be $7,150. (“Mill” is from the Latin word for thousand, so the mill levy is applied to each thousand dollars of assessed valuation. Thus, 71.5 thousand dollars multiplied by 100 mills = $7,150.)
TABOR, Douglas Bruce’s 1996 “Taxpayer Bill of Rights,” limits how much money any taxing jurisdiction can retain based on population growth plus inflation. Unless a taxing jurisdiction has “de-Bruced,” that jurisdiction must refund the excess to its taxpayers. The preferred method, however, is to lower the mill levy so that less money is collected in the first place. In some cases, the yearly decline in mill levies due to increased property values has resulted in little or no increase in the property tax bill.
Overall, county assessors have determined that home valuations increased by ½ percent per month over the 24-month assessment cycle from July 2018 to June 2020, so if your home’s 2021 valuation has increased by a lot more than 12% over its 2019 valuation, and there have been no permitted improvements or additions to your property during that two-year period, then you may have a basis for appealing your new valuation.
In my own case, the valuation increase over that period was 34.2%, so I will be appealing my new valuation, since I have made no capital improvements to my home since 2018. I won my appeal two years ago, so my 2018 valuation is acceptable to me. If you didn’t appeal in 2019, or if your appeal wasn’t successful, you may want to appeal even if your 2020 valuation’s increase is close to that 12% average valuation increase.
Any appeal must cite qualified comparable sales which you’ll only find by clicking on the “Sales” tab on the assessor’s web page for your home. Any other comps will be rejected, so don’t ask me or your own agent to find any for you. Remember to “age” the sold prices by 1/2 percent for each month that a given comp’s sale occurred prior to June 2020.
Higher Home Values Mean Higher Property Taxes
This amazing seller’s market is raising everyone’s real estate values, which is bound to be reflected in higher property taxes.
Early next month all property owners in the state will receive a notice from their county assessor assigning a new “full valuation” on which 2021 and 2022 property taxes will be based.
The good news is that the valuation will be as of June 30, 2020, avoiding the worst of the increases which we have see since then.
Look for another blog post in early May in which I will instruct you on how to tell whether your home’s valuation is too high and how to appeal it.
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