Real Estate Property Taxes
100 Real Estate and Relocation Tips in 100 Days (Day 25)

Colorado enjoys comparatively low taxes on residential properties. A series of voter and legislative initiatives have combined to make this true, but for this article we will just concern ourselves with the structure and mechanics of taxes as applied to real property.

Property taxes in Colorado stay within the county where the property is located, with no property taxes supporting state government. Approximately 60% of property taxes collected support the public school system, 20% to 25% support county government, and the balance support municipal government and taxing districts such as those providing fire protection or recreation districts.

The county assessor values property every odd numbered year, and then applies the state legislature's bi-yearly residential assessment rate to that value, as shown in example (2) below. The assessment rate is used with the county assessor's determination of the total real property value in the county to determine the counties mill levy. The other taxing entities serving the property also calculate the necessary mill levy to support their budget needs, and those are added together to determine the total mill levy as shown in example (1) below:

Example
County Tax rate 2.5%
City tax rate 1.2%
Fire District tax rate .3%
School District tax rate 5.5%
Total Tax Rate 9.3%
Total Mill Levy 90.3%

Example 2: Calculating the Mill Levy

The county assessor determines the value of real property in the county as $1,000,000,000. The county commissioners have determined the total revenue needed to fund county services is $25,000,000. Therefore:

$1,000,000,000 / $25,000,000 = 2.5% or 25 mills

 

The other taxing district serving the property make similar calculations to determine the total mill levy as shown in Example 1.

The current residential assessment rate is 7.96% of actual value. Assuming the actual value of a property is $300,000 we can determine the assessed value by multiplying:

$300,000 x 7.96% = $23,880 (assessed value)

Example 3 below shows the calculation to determine the property taxes due and payable on our fictional home by multiplying the assessed value by the mill levies decimal equivalent:

Assessed Value X Mill Levy = Taxes
$23,880 X .0903 = $2,220.84

 

Now that we know how the property taxes are calculated, there are a variety of explanations to consider, such as:

1. Senior tax relief which may reduce property taxes for those over 65 by 50%
2. Notice of Valuations must be sent to each homeowner by May 1 of every year.
3. A property owner can challenge the valuation.
4. Limitations on tax increases based on inflation or prior year revenues.
5.The taxing entities requirement to hold open budget hearings.
6. Defined payment schedules as shown on the county treasurers tax notice.

Most Colorado counties have a complete explanation of the entire process, but this post provides the basic information of the process and calculation method.

Photo Credit: Stockxpert

Copyright Kristal Kraft ~ all Rights Reserved

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