Here’s What You Need to Know About Appealing the Assessor’s Valuation of Your Home

By the time this column appears in print, all Denver and Jefferson County homeowners will have received in the mail a letter from their County Assessor declaring the “Actual Value” of their real estate holdings. The same is happening in all Colorado counties. The letters give taxpayers until June 3rd to file an appeal of that valuation which, if successful, could lower the “Assessed Value” (explained below) against which taxes will be levied for 2019 and 2020.

Property taxes in Colorado are paid in arrears, which means that the property tax for 2019 isn’t payable until April 2020, and the property taxes for 2020 will be payable in 2021. The valuation you just received in the mail, however, is not a statement of your home’s current value.  Rather, it is a statement of your home’s market (or “Actual”) value as of June 30, 2018, based on its condition on January 1, 2019.

In other words, if your house was significantly improved between June 30, 2018 and January 1, 2019, the assigned value should be what your home in its new condition would have been able to sell for on June 30, 2018, based on what comparable homes did sell for prior to that date. (You may need to read these two paragraphs a few times!)

The good news is that even though your home’s value has continued to increase since last June and will likely continue to rise for the next year or two, you will only pay property taxes for the next two years based on what it might have sold for in June of last year.

Nevertheless, many of us (me included) are going to be shocked at how much the assessor claims our homes have increased in value.

Additional good news for homeowners is that, because of both TABOR and the Gallagher Amendment — too complicated for me to explain here — the percentage of “Actual Value” against which your local mill levy will be applied keeps going down—from 21% of actual value in 1982 to 7.15% today. That percentage creates the “Assessed Value.”

To keep it simple, here’s an example using round numbers. If the assessor said the market value of your home as of June 30, 2014 was $500,000, your “Assessed Value” was 7.96% of that, which equaled $39,800.  If your mill levy was 100, then your tax bill was $3,980 (100 x 39.8).  Let’s say your home’s “Actual Value” as of June 30, 2018 rose to $600,000, a 20% increase. Your new “Assessed Value” is 7.15% of that, or $42,900. Thus, your tax bill, at 100 mills, will be $4,290, a 7.8% increase in your property taxes despite a 20% increase in market value. That’s only $90 more than if your home was worth $200,000 in 1982 when the assessment rate was 21%!

And it gets even better. Unless the voters in a particular tax district voted to “de-Bruce” the mill levy, that tax district must lower its mill levy as much as necessary to keep its revenue from increasing beyond TABOR limits based on population growth plus any increase in the cost of living.

Nevertheless, since your property taxes are the sum of multiple mill levies from various districts, that hypothetical rate of 100 mills that I used above might actually be lower this year, further reducing your property tax bill.

Here are two key points you must keep in mind when appealing the valuation assigned to your home by the Denver assessor:

1) You can only appeal the assessor’s valuation by citing comparable sales during the 24 months prior to June 30, 2018. Unless your home was mischaracterized (wrong neighborhood, style, etc.), all eligible comps are listed under “Comparables” on the assessor’s web page for your home.

2) You must “age” every comp you cite in your appeal by about 1% per month, since the median increase in our residential property values was about 24% over that 24-month period.  Thus, if a comp sold in January 2018 for $500,000, you can’t cite it as a comp at that price, but must increase that price by 6% to obtain its value as of June 30, 2018.

To find your home on the Denver assessor’s website, visit http://www.denvergov.org/property and enter your address. When your property is displayed, then click on the address and you’ll be able to click on a “Comparables” tab where you’ll be able to see exactly how the value of your home (the “Subject” property) was determined against three or more comparable sales identified by address. If you feel that those comps are not truly comparable to your home, you can click on the “Neighborhood Sales” tab and choose three or more other comparable sales and cite those in your appeal. You have to file your appeal by June 3rd.  Over the years, I’ve found in-person appeals to be most successful.

To find your home on the Jefferson County assessor’s website, visit http://assessor.jeffco.us and click on “Prop-erty Records Search” in the lower middle of the screen, then click on “Address” on the left of the screen.  “Sales” is on the top center. This is all explained on a website that I created for Jefferson County appeals, www.HowtoAppealValuations.info.

Attention Homeowners: It’s Reassessment Season!

This week you should have received the new valuation opinion from your county assessor. Your 2019 and 2020 property taxes will be based on that value, which is what the assessor believes your home might have sold for on June 30, 2018. In next week’s column I’ll explain the process for appealing that valuation to lower your tax bill.

Property Taxes in 2019 Will Be Based on the Value of Your Home This Saturday

Real_Estate_Today_bylineColorado’s constitution mandates that every county assessor base the assessment of real estate taxes on the full market valuation of each parcel as of June 30th of every even-numbered year. Next May, the assessor will mail out an estimated value as of this Saturday to each parcel owner, giving until June 1st to challenge the assessor’s valuation.

If you are wondering how much your property taxes might go up for the next 2-year cycle, you need only compare what your home might have sold for on June 30, 2016, with what it could sell for now, based on the sale of comparable homes.

Although June MLS statistics aren’t complete yet, let’s compare current sales statistics with those from June 2016. (Remember: Not all sales are on the MLS.)

Statistics for Denver:

Using REcolorado (Denver’s MLS) as my source, the average price per total square foot (PSF) of condos and townhomes in the City & County of Denver rose from $279 in June 2016 to $320 this month. That is a 14.7% increase in value, which is surprising, given that the median sold price during that same timeframe increased from $277,250 to $380,500, a 37.2% increase.

During that same period the average price per total square foot of detached single family homes rose from $231 to $271, a 17.3% increase, although the median sold price increased by 20% (from $405,000 to $486,200).

These calculations are for Denver as a whole. There will, of course, be greater or lesser valuation changes in different Denver neighborhoods.  Here are some examples, based on price per total square foot:

Green Valley Ranch – 10.7%

Northeast Denver – 14.9%

Cherry Creek, Hilltop, Montclair – 15.4%

Southeast Denver (Alameda to Evans) – 10.5%

Southeast Denver (south of Evans) – 10.7%

Downtown Denver (to Platte River) – 19.8%

Northwest Denver (Sloans Lake, Highland, Berkeley, Sunnyside) – 18.4%

Golden Triangle  – 9.6%

West Denver (Colfax to 6th Ave. only) – 24.9%

West Denver (6th Ave. to Alameda) – 14.9%

Southwest Denver (Alameda to Jewell) – 24.4%

Southwest Denver (south of Jewell Ave.) – 24.4%

Valuations also can vary based on style. For example, across Denver ranch style (1 story) homes saw an increase in price per total square foot of 19.3%, whereas non-ranch style homes saw an average increase of 13.8%. 

The age of the home can also make a difference. Single family detached homes built before 1990 saw their average PSF values increase by 16.2%, whereas homes built in 1990 or later increased by 11.5%. 

Statistics for Jefferson County:

Using REcolorado (Denver’s MLS) as my source, the average price per total square foot of condos and townhomes in Jefferson County rose from $188 in June 2016 to $232 this month. That is a 23.4% increase in value. Condos increased their value by 21%, and townhomes increased their value by 26.4%.

During that same period the average price per total square foot of detached single family homes rose from $175 to $211, a 20.6% increase.  

These calculations are for Jefferson County as a whole. There will, of course, be greater or lesser valuation changes in every city and in every subdivision.

Here are the increases broken down by city addresses (which can include unincorporated areas):

Arvada – 20.9%

Lakewood – 21.4%

Golden addresses  – 8.8%

Littleton addresses – 13.6%

Wheat Ridge – 24.3%

Evergreen addresses – 10.2%

Smaller cities such as Lakeside and Edgewater did not have a enough sales to produce statistically valid percentages.

Valuations also can vary based on style. For example, ranch style (1 story) homes in Jeffco saw an increase in price per total square foot of 20.7%, whereas 2-story homes saw an increase of 17.3%. 

The age of the home can also make a difference. Single family detached homes built before 1990 saw their average PSF values increase by 18.8%, whereas homes built in 1990 or later increased by 12.7%. 

Conclusion:

All these variations point to only one conclusion — that you need to use the tools provided on the Denver and Jeffco assessors’ web pages (which I’ll explain in a May 2019 column) to determine whether the assessor has valued your home correctly. Last May I challenged the increase on my own home, and, by using the eligible comps listed on the assessor’s website, I received a reduction of nearly $150,000.

Lastly, let me share how the Gallagher Amendment to the state constitution serves to reduce the impact of increased valuations on residential property tax bills.

That amendment fixes the assessment ratio for non-residential property at 29% of the full valuation. For example, if a commercial property has a full valuation of $1 million, the assessed value against which the mill levy is applied is 29% of that amount, or $290,000.  Because that assessment ratio remains fixed at 29%, and because the amendment requires that non-residential property taxes equal 55% of the total property tax revenue statewide, the ratio applied to residential properties keeps dropping from 21% when the Gallagher Amendment took effect in 1982.  Last year, that ratio dropped to 7.2%,  and it is projected to drop to 6.11% next year.  The end result could actually be a reduced assessed valuation even in the face of an increased full valuation.

Let’s say your home was worth $400,000 in 2016, with an assessed value of $28,800 (7.2%). Now your home is worth $500,000, a 25% increase, but if the assessment ratio is reduced to 6.11% as expected, the mill levy will now be applied to an assessed value of $30,550 — an increase of less than 6.1%.  Thus, if the mill levy remains unchanged, your property taxes will increase by only 6.1%, even though your home’s value (as determined by the assessor) increased by 25%.

Moreover, mill levies from many of the different taxing districts keep declining as a result of the Taxpayer Bill of Rights (TABOR) provision of the constitution, so your actual property tax increase in the above example could well be less than 5%.