Homeowners in Colorado are liable for annual property taxes. Property taxes pay for many municipal and regional services. A portion of taxes goes towards financing the local school system, public health programs, and public services like libraries and emergency services.
The amount of property tax owed can vary year by year and is derived from a formula that begins with the property’s appraised value.
Every two years, the county assessor reviews and adjusts property values. Since there can be thousands of residential properties within a single county, an actual property value may be broadly assigned to homes that meet certain criteria. This process is known as a mass appraisal.
Actual property values are often overestimated due to this practice. Particular homes may be worth much less than their determined value due to structural issues or changes to the neighborhood. Residents have the right to appeal the assessor’s valuation and reduce their property tax liabilities.
On May 1st, county residents will receive information from the county about any changes to their home’s actual value as determined by the county assessor. Residents have one month to contest the value by submitting a protest to their assessor. The assessor may approve or deny the claim. Experts advise residents to work with a tax professional throughout this process.
The actual value is then used as the basis to calculate the property tax bill. In Colorado, all counties levy an assessment rate of around 7.15 percent for residential properties. The actual value multiplied by the assessment rate gives a number called the assessed value, which is a fraction of a property’s actual value.
The assessed value is then applied to a formula known as the mill levy to determine the final tax bill. The mill levy charges 0.1 percent of every $1,000 in assessed value. Mill levies vary by city.
For example, the mill levy in Denver is 74 mills as of 2021. This means that a home with an assessed value of 20,000 would pay around $74 for every $1,000. In this case, the tax bill would amount to $1,480.
Some residents qualify for reduced property tax bills or exemptions. In Denver, seniors, families that earn a low income, or people with disabilities can apply for exemptions. Some counties also exempt disabled veterans.
After receiving the tax bill in January, homeowners have until the following January to begin making payments. Residents who pay the tax bill in one payment must submit the lump sum by April 30th, while residents who choose to divide their payment in two must pay the first installment by February. The second installment is due June 15.
Late property tax payments can incur a 1 percent monthly penalty. In cases of severe delinquency, the property tax may be sold as a lien on auction. When this occurs, the property owner is still liable, but will have to pay additional fees and surcharges to clear their debt.
Many cities enable residents to view how their property tax dollars are divided among the various municipal agencies. Residents who disapprove of how their taxes are allocated can inform their local officials, or relocate to an area with lower mill levies or average actual property values.