Hopefully many of you on this list took the time to appeal your Colorado property…
Did you get your envelope? Is the property tax assessor crazy? Are you ready for your new tax bill? Real estate sales have slowed drastically, prices have softened and yet your property tax value just increased substantially. Adams county assessed values increase 50% on commercial and 24% residential, Denver 20%, Arapahoe 22%. How is this possible that assessed values are skyrocketing yet the market is flat? What should you do? I created a comprehensive guide with 6 free & simple steps to help you fight your assessment and win.
- How are property tax values determined?
- When are the values determined?
- Why is this year such a big jump?
- What can you do about it?
- Are further increases on the way?
- 5 tips to appeal and win
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 19 they would be using 17 and 18 comparables (to be exact you can use a comparable up to 6/18)
Why is this year such a big jump?
Most areas in Colorado continued picking up steam (aka value) in 17 and 18 and both years were very large for increases in value. 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
How can values be flat/decline yet property tax values increase and taxes increase?
Remember, property tax value is not market value. Property tax value is derived from prior sales (last summer and earlier). The market was in a much different place then than it is now. The statute in Colorado does not care about current market value. The increase you are seeing this year was for “prior” real estate appreciation that is now just flowing through to your property value which ultimately determines your property taxes
Are further increases on the way?
Increases will be determined based on increases in value. If the market levels off then in the next reevaluation cycle, 2021 property tax values should remain constant. Note, counties are fast to raise property values, but very slow to drop them unless you appeal.
Should you protest your taxes
Yes, if there is any chance you think your property is overvalued based on recent sales in 2017 and 18. There is very little downside risk on an appeal other than a few hours of time. The worst I’ve seen assessors say is no and the value remains the same. The process is relatively easy. Below is a 5 step guide for appealing. Ensure you follow this to a T in order to have your appeal considered and increase your probability of winning.
6 tips to appeal your Colorado Property taxes and win
Although 2019 will be difficult to win a large appeal since values have almost universally gone up throughout the state, you should be able to get at lease minor relief if your property is overvalued. I’ve appealed my property taxes in 3 counties throughout Colorado and won on each one. Below are 6 tips to help you navigate the appeal and increase your odds of winning.
Before starting, it is important to note that the assessor doesn’t care what you “feel” your property tax value should be, what your zestimate says, or what your recent appraisal was for. The property tax value is based on facts during a stated time period. The only way to have a chance at winning an appeal is to follow the directions to a T and leave your feelings behind.
- Dates are important, by statute you have from 5/1 to 6/1. If you miss these dates you are out of luck. Most counties allow you to appeal online and the process is pretty easy (just google your county + assessor). They typically have a simple online form where you can put in your information and the appeal information
- Follow the rules: remember for this year the only comparables that can be used are prior to 6/30/18 (typically a two year period), statute says that you cannot go back more than 5 years unless there are extenuating circumstances
- Check your facts: This is low hanging fruit. Ensure the assessor has your info correct, is the property and office building yet classified as mixed use? Is the square footage correct? Is other information accurate. Correcting this info could substantially reduce your tax burden
- On residential, it is a numbers game: How residential appraisals work is the county calculates a neighborhood average and finds sales in close proximity to your house with similar characteristics. The averages can lie. For example in my neighborhood when I appealed in 17, there were a number of lower sales (also some higher one), I was able to make the case that I felt my house was closer to the lower sales (remember you are not talking about market value, nor does this influence the sale price of your home, etc…). I was successful in my appeal and got my property value reduced over 30%
- On Commercial, use both methods: On a commercial property both the sales and income approach are used. If you had a tenant during this time period, the income approach (take net operating income divided by the applicable capitalization rate—the income approach on a commercial property is a separate article I’ll post at a later date) is a very good method to start with. The sales approach is the second method that can be utilized. Commercial is a bit more in depth than the residential appeal since commercial properties are considerably less uniform than residential properties.
- Use various tools to get your facts straight: To win an appeal, the appeal must be fact based. Saying you “feel your property is overvalued” is a waste of time. Make sure you have your facts straight (at a minimum 3 applicable sales for residential; for commercial address both the income and sales approach). You can get both sales comparables from the county websites for a specific neighborhood (do not use Zillow or Trulia, the square footages can be inaccurate, make sure you use the county data to ensure you compare above grade square footage and you will also have to input the parcel id numbers for each of your comparables). For a commercial property use a tool like loopnet.com or Costar to see what asking rents are , get sales comps, etc… loopnet has many pictures and details on various commercial properties.
Long and short, Colorado is a bit unique in that the values we see now are from last summer and prior so the recent jumps in values have not been fully factored into tax bills yet. Fortunately, you do have the ability to protest and if done right you more than likely will win. I’ve protested my taxes many times on both residential and commercial properties and won all the appeals. Ensure you follow the steps above in order to increase your odds of winning. If you appeal, I’d love to hear how it went. If you have additional tips, please add to the comments.
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).