It is tax time in Colorado: How high will your property tax increase?
As you recently opened the mail and received your notice of assessment from the county, you might have fallen out of your chair or uttered your favorite expletive. When I opened my assessment I was the proud recipient of a 40% increase in value which means my taxes are going up substantially. This is real money, say your taxes are 6k/year, this could (depending on mill rates, etc..) equate to a tax increase of almost 2400/year that you are stuck with into perpetuity (property taxes rarely go down)
According to a recent Denver Post Article the average increase in residential values in Denver County is about 30% with some commercial categories going up almost 33%. Being an average some went up substantially more. This trend is happening throughout the state including the entire Front Range and many of the mountain communities Colorado has a very short window for appeals (June 1) so if you are thinking about appeal, now is the time.
Having personally successfully appealed my taxes over numerous cycles in various counties and helped a number of associates throughout Colorado appeal their taxes I put together a quick Guide to appeal your taxes and answer the questions below to help everyone navigate this process.
- Why are taxes going up so much this year?
- How are values calculated in Colorado?
- How is Colorado Different than other states?
- Can you beat the assessment system?
- What can you do about an increase in your tax value?
- When do I have to appeal by?
- Should you appeal?
What you need to know about Colorado property taxes
Colorado is different than most other states.
Properties are reassessed every odd number year in Colorado (for example 2011, 2013, etc… are reassessment years). In many parts of the country, the assessor looks at the current market value. This is not the case in Colorado. The assessment is looking back in time. For this assessment cycle (2015) the assessor is looking at sales from June 2012 to June 30 2104
Why is this year so different?
If you look at the recovery in Colorado, it really got going substantially in 2011 and 2012 and gained substantial steam in 2013 and 2014, many of the lower sales dragging the market down got flushed out in the 10/11 timeframe. In the last cycle the assessor included many of the distressed sales in the revaluation in 13 (used 12 and 11 data). In the current cycle the vast majority of sales are substantially higher than the 2013 cycle. For example in my neighborhood, I appealed my taxes in 2013 and there were a number of lower sales, when I went to appeal my taxes this cycle the sales were considerably more consistent in their sales price/ft
How are values calculated?
The assessor looks at sales within the two year time period ending 6/30/14. Supposedly there are some complex algorithms each assessor uses to determine your value, but here is what it boils down to. The assessor looks at properties in your neighborhood and similar neighborhoods of similar build quality (if you look at your assessment details it states your build quality) of similar square footage. This model works very well in uniform neighborhoods, think castle rock in douglas county, all the houses in a neighborhood for the most part were built in similar build year, similar quality, etc… The assessment in this area is pretty accurate, where assessments get interesting is in non uniform neighborhoods. Think of many redeveloping areas in Denver, you might see a crappy house next to a brand new scrape. The scrape is substantially bringing up the value of the crappy house
How do you appeal your taxes?
All Colorado counties are the same in their appeals process. Below is a quick guide to property appeals in Colorado and how to appeal your residential and commercial property taxes (commercial you can use the sales approach but will also need to look at the income approach). At the bottom I also put a link to the metro Denver county property assessor websites. It is worthwhile to evaluate your property to make sure it is properly assessed. If your property is over assessed you are paying too much for taxes
Should you protest your property value?
There are many reasons that someone should protest their property values. First, if you purchased your property in the last three years and your assessment is higher than your purchase price an appeal should be filed. Next, if your property is overassessed compared to sales in your area. Remember you cannot use current sales, you have to use sales earlier than 6/30/14 in your appeal.
How to beat the system:
The assessor is using an average when determining your value which by default means there are sales that are higher and sales that are lower. In a uniform area it will be difficult if not impossible to appeal your taxes (like in a relatively new neighborhood in parker). In many areas though the trick is to use the outliers to help your appeal (ie: when you appeal your taxes you have to show three comparables, if you can locate three comparables on the lower end of the spectrum this could dramatically change your valuation) to bring your values down.
Can you protest your own taxes?
Yes, I have protested my own taxes successfully in multiple counties. It is typically a simple process on a residential property. On a commercial property, the process is more in depth but an owner can appeal their taxes. I would suggest a formal appeal be filed by the owner and then setup a meeting with the assessor to discuss your concerns
When does an appeal need to be filed by?
June 1 or the next business day if 6/1 falls on a weekend
Are all counties in Colorado the same? Yes the assessment process is governed by state statute
Quick tips:
- June 1st is the deadline, if you miss it you are out of luck
- Watch your dates: you can only use comparables within the specified data range (2 years prior to 6/30/14)
- Watch the details, when you appeal you will need to find 3 comparables to support your value and get the appropriate parcel ids, etc… this is a simple process on the respective county website
- Use outliers to your advantage, if you live in a non uniform area and taxes jumped substantially the outliers are fair game as comparables
- Remember that assessed value and fair market value are two different things, in the protest you are focusing on the value at a particular point in time
- Do your appeal online (below is a link to many assessors for the online protest), it is simple and quick
- Read the quick guide on appealing from your county or the one from Jefferson county (shows the steps pretty straightforward
How do I appeal my taxes?
Each county typically has a link on their website to forms that can be either filled out digitally or filled out and mailed in Jefferson county did a nice summary of the appeal process: http://jeffco.us/assessor/appeals/appeal-real-property-valuation/
Are there other resources?
Below are some links to the county websites that have the forms for appeals, etc…
Denver County Assessor: http://www.denvergov.org/assessor/ProtestingYourPropertyValue/tabid/378144/Default.aspx
Arapahoe County Assessor: http://www.co.arapahoe.co.us/apps/protest/residential/
Jefferson County Assessor: http://jeffco.us/assessor/appeals/appeal-real-property-valuation/
Boulder County Assessor: http://www.bouldercounty.org/dept/assessor/pages/default.aspx
Douglas County Assessor: http://www.douglas.co.us/assessor/documents/2011ReappraisalFactSheet.pdf