Get ready for sticker shock as you open the mail and get your tax bill. …
With much fanfare, CO legislators met in a special session to focus on tax relief once again after the searing defeat of HH. As suspected, the agenda was filled with allot of stuff not related to property taxes (Tabor checks, low income tax credits, food assistance, etc…) so you can only imagine the outcome. In the end your taxes are still going up a ton with only minimal relief. What other taxes are being increased in Colorado? How are commercial properties impacted?
What is in the new property tax proposal?
There are two key changes to help reduce property taxes
Property tax cuts that would be achieved by changes in the formula used to determine residential property taxes. The deduction from a property’s value for tax purposes would rise from $15,000 to $50,000. The assessment rate, which is applied to determine the assessed value, or what’s taxable, would be reduced from 6.765% to 6.7%.
New tax bill allows taxes to still rise substantially
Unfortunately you shouldn’t get too excited about the proposal as it will save the median homeowner $302 dollars. Furthermore taxes will increase 35% with an annual increase of 1,139 assuming a median home price.
*** Also note commercial property taxes are excluded from this bill as the legislation only focuses on residential properties. ***
Other tax bills coming down the pipeline in Colorado
No legislative session would be complete without the legislature figuring out how to redistribute more tax dollars. This session is no different as Tabor is once again on the docket. Instead of having tabor refunds based on how much you pay, it flattens the refunds to 800 each person. So someone owning the median home would now receive several thousand less in Tabor. Once again, the net savings of 300 is coupled with a 2000 reduction in the tabor refund.
Other tax measure on nightly rentals
The proposal to tax nightly rentals as commercial properties has now advanced out of committee. This will tax properties that provide nightly rentals greater than 90 days as commercial properties. The bill is not final, but definitely worth watching as it will have substantial impacts especially in every ski town. Here is a link to the most recent nightly rental tax legislation.
Once again, our legislature promises the moon on tax relief, while at the same time,ironically, your taxes will increase. This is exactly what is happening with the current tax proposal. The average savings from the new tax bill will save the median homeowner 300 dollars, while taxes are still increasing 1,139. While at the same time more money is being taken away from homeowners tabor refunds to help non homeowners that aren’t even paying the property taxes.
Unfortunately I doubt property owners are going to be happy with the new legislation. Furthermore, 2024 is going to usher in considerable changes in Colorado property taxation with nightly rentals clearly in the sights of the governor and legislature to tax as commercial properties. Also, I assume land use and various other tax policies will be revived once again. With all these changes it will be critical to stay in the loop on Colorado tax policy this legislative session.
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Written by Glen Weinberg, Owner 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 Bloomberg, Businessweek ,the Colorado Real Estate Journal, National Association of Realtors Magazine, The Real Deal real estate news, the CO Biz Magazine, The Denver Post, The Scotsman mortgage broker guide, Mortgage Professional America and various other national publications.
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