How often are property taxes assessed?
Property taxes are assessed based on a proposed 18-month period up to June 30th of the prior year although Assessors extend this period to 24 months. For the current property assessment this period would be from 7/01/20 through 6/30/22 and the taxes are then applied in every odd number of years.
Commercial property is assessed similarly but were affected by Covid in a different manner due to commercial property sales effectively stopping entirely during this time while residential sales continued with an entirely skewed projection of home values.
During the crux of the pandemic residential homes were selling for well over appraised value which has certainly introduced a homeowner bias of the true value of their homes. Many of the buyers during this period were millennials and 64% of those buyers have some regrets with respect to their purchase. At the time of purchase, how many could have predicted such a significant increase in taxes, particularly with the lull in the market today?
What is the Market Value Approach to tax assessment?
In essence, this means every home is assessed and given value based on the sale of other similar homes in their area. This also means that the actual value of your home can increase even though you may not have made any improvements, such as adding bathrooms or remodeling a kitchen, with the sole intent on increasing value. Actual value is then used to derive the “assessed” value used to determine annual taxes you pay on your home.
An appraisal will provide you with the value of your home as well but will consider upgrades to the property as well as market comparisons. It’s more of a “hands-on” approach so is used when selling a home to ensure the homeowner receives a return on their investment.
Of course, your Realtor® can also provide you with a Comparative Market Analysis that will factor in property improvements and sales of similar homes in the area; however, these are not appraisals. They are useful when deciding on a selling price prior to an appraisal.
What is the difference between “actual” vs. “assessed” value?
The actual value of your property is the market value provided by a county assessor which is then multiplied by a 27.9% assessment rate to get the assessed value. This assessed value is then multiplied by a mill rate, a percentage determined by taxing authorities, to determine your annual tax bill.
*** As every state has different assessment and mil rates your information may be different. Contact your local county assessor for information on your area.
How did Covid potentially affect current property tax assessments?
If, for example, 20 of your new neighbors purchased their homes in 2021 at above the appraised value, your perceived home value is now in line with those around you when tax assessment time comes. And since assessments are based on the 2 years prior to this year everyone in Colorado is experiencing a 30% to 80% or more increase in their property taxes with similar increases in other states. For many these monthly tax payments will now be well above what they were paying before, adding additional burden in an inflation economy.
What if I want to appeal my property tax increase and assessments?
The process of appealing your property taxes will begin with your County Assessor. Gather any information available such as a recent appraisal, proof of upgrades including pictures or a CMA from your real estate agent. The process can be initiated online here for El Paso County, CO. You may have an option to discuss this with an assessor directly so you can understand how they derived their information and potentially avoid the Appeals process.
As a homeowner it’s important to know what you are paying for and property taxes can be a significant chunk of change over the lifetime of your home. Taxes can, and do, affect the buying/selling process. If your property value has been assessed erroneously high, buyers may avoid purchasing your home when you decide to sell. On the other hand, if your property was assessed at the low end you may have difficulty getting market value.
Ultimately the choice to act on an appeals process is yours; however, the process can be lengthy and result in no change, necessitating an appeal to a higher process.
If you have any questions about the assessment process or need help appealing your property's assessed value, don't hesitate to contact a qualified real estate professional.
Colorado Division of Property Taxation: This website provides information on the Colorado State Tax Assessment process, including how to appeal your property's assessed value.
Colorado Department of Local Affairs: This website provides data and statistics on property taxes in Colorado, including property tax rates by county and statewide property tax revenue.
Colorado Association of Realtors: This website provides resources for homeowners, including information on the assessment process and how to appeal your property's assessed value.
RE/MAX: This website provided additional resources including instant home values and listings.
National Association of Realtors: This website provides data and statistics on the real estate market, including trends in home prices and sales.