Benjamin Franklin’s famous statement — “in this world nothing can be said to be certain, except death and taxes” — remains true to this day. But while the need to pay taxes is unavoidable, the amount you owe for your real estate taxes is not necessarily so set in stone. That amount can be challenged if you think your property has been valued too high.

Colorado Property Assessments: Overview

Colorado real property is generally assessed for tax purposes on a two-year cycle, which occurs every odd year. Absent a statutory exception, the valuation of a taxpayer’s property for both years in the reassessment cycle should be the same. Real property is assessed by a tax assessor in the county in which the property is located. For commercial property, the assessor determines the actual value of the property by “appropriate consideration” of each of the three traditional appraisal methods: the cost approach, the market (or comparable sales) approach and the income approach. Tax assessors use data for the 18-month period beginning two years before the January 1 assessment date and ending six months before that date.

In most counties, assessors use the so-called “mass appraisal” process to initially determine a property’s value. A mass appraisal values a group of properties using common data, standardized methods and statistical testing. Because appraisers generally do not prepare a single-property appraisal at this initial stage, the unique characteristics of properties are typically not incorporated into a property’s initial assessment.

Your property tax bill is calculated by first multiplying the county’s “actual value” by the “assessment rate,” which for non-residential property is 29%. This gives you the “assessed value” of the property. Real estate taxes are then determined by applying what is referred to as a “mill levy” to the “assessed value.” The “mill levy” (or tax rate) for any given property varies; it might include mill levies from several different taxing districts, including schools, cities, county government, fire, water and sanitation, and/or special districts. “Mill levies” are expressed in percentages or “mills.” One “mill” is equal to $1 of property tax for every $1,000 of assessed value.

Calculating Property Taxes

Tax bills in recent years have steadily increased. Part of that increase may be attributed to rising real estate values for some properties in some parts of the state. However, many of those increases may also be due to aggressive valuations at the mass appraisal stage. If a property owner believes that its property is valued too high, it is important to preserve rights to challenge that value by appealing to the proper tax body at the proper time. The below chart provides guidance on the entities that hear tax appeals and the timeframes to appeal.

Tax Appeal Timeline

Conclusion

Taxes are a necessary part of government operations. However, property owners should not pay more than their fair share. There are statutory mechanisms provided to the public to ensure that your property is correctly valued and you are not taxed more than is appropriate.