If you are in Colorado, you likely have received your property tax notice of reassessment (or will shortly) and likely were very surprised. According to a recent Denver post article properties in the front range increased in value up to 70%. As a result, tax bills will rise substantially throughout CO. What can you do? Time is of the essence since appeals must be filed June 1st! Many folks have questions and we have the answers:
- How are property tax values determined?
- When are the values determined?
- Why is this year such a big jump?
- Should you appeal?
- What can you do about it?
- Are further increases on the way?
- See 5 tips to help you protest your taxes
How are property tax values determined and when are they determined? In Colorado every county is the same, each odd numbered year is a revaluation year (for example 15 was a big year for revaluations). During the revaluation period the tax assessor looks at comparables 18 months prior, so for 2017 they would be using 15 and 16 comparables (to be exact you can use a comparable up to 6/30/16)
Why is this year such a big jump? Most areas in Colorado really started picking up the last 5 years. In many areas values increased > 15% a year during these two years. These increases were reflected in the sales that ultimately were used in the last revaluation period. This is especially prevalent in areas that were lower priced or “gentrifying areas”
Should you appeal? The answer depends on the location and property type. For example, if you are in an extremely uniform area (think a planned unit development- PUD) in Parker where the houses were built around the same time it will be difficult to appeal. The most likely area for you to win an appeal is a rural area and/or non uniform area. For example in many intown Denver submarkets there have been a number of new homes built, people have gutted/rehabbed, “popped the top”, etc… if you haven’t done a large remodel you should be a candidate for an appeal since your property should not be valued at the same $/ft as a rehabbed property. The tax assessment is a weighted neighborhood average, if you can prove that your property is below average with lower priced sales then an appeal should be done. Note, on commercial properties use the income or sales approach (or possibly both) to make your case
What can you do about it? You can protest your value this summer (from 5/1 to 6/1), using comparables from the current revaluation period. See 5 tips to protest your value and win!
Why is this higher/lower than my Zillow value? The Zillow value has no correlation to tax value. Zillow is an “estimate” of value. Tax values looks at actual sales during the specified period (in this case prior to June of 16). Also, when you do an appeal, do not use Zillow for your comparables, you have to look at the assessors website to ensure you are comparing to like properties that have similar above grade square footage.
Are further increases on the way? Increases will be determined based on increases in value. Unfortunately, future increases are likely as values continue to increase. Revaluations are done in every odd year based on 18 months’ prior sales. With most of Colorado continuing to appreciate, future upward revaluations are likely
Long and short, Colorado is a bit unique in that the values we see now are from basically two years ago so the recent jumps in values have not been fully factored into tax bills yet. Property tax owners are definitely in for further increases at least in the next few revaluation cycles based on the large increases throughout the state. Fortunately, you do have the ability to protest and if done right you more than likely will win. I’ve protested my taxes multiple times and won each one both in Colorado and throughout the country on commercial properties. I put together a quick guide to help you through the process. Make sure you focus on the dates and details of the appeal process since they are critical in order to win an appeal
- 5 tips to protest your taxes: https://coloradohardmoney.com/2014/04/30/5-tips-to-appeal-co-property-taxes/
- With increased taxes, Denver’s bond measure grows: http://www.denverpost.com/2017/04/25/denvers-bond-measures-target-grows/
- Are you ready for a tax spike: http://www.denverpost.com/2017/04/25/metro-denver-property-tax-spikes/
- Tips from Denver post to protest your taxes: http://www.denverpost.com/2017/05/04/2018-colorado-property-tax-hikes/
Written by Glen Weinberg, COO/ VP Fairview Commercial Lending. Glen has been published as an expert in hard money lending, real estate valuation, financing, and various other real estate topics in the Colorado Real Estate Journal, the CO Biz Magazine, The Denver Post, The Scotsman mortgage broker guide, Mortgage Professional America and various other national publications.
Fairview is a hard money lender specializing in private money loans / non-bank real estate loans in Georgia, Colorado, Illinois, and Florida. They are recognized in the industry as the leader in hard money lending with no upfront fees or any other games. Learn more about Hard Money Lending through our free Hard Money Guide. To get started on a loan all they need is their simple one page application (no upfront fees or other games).