America's Property Tax Advisor

Colorado Votes on Tax Exemption


Colorado businesses with possessory interests on government-owned land or equipment will get a tax break if Amendment U is approved by voters in November.


While government-owned property is tax exempt, the financial benefit that a business or individual obtains from using that land or equipment is not.


Amendment U exempts approximately 5,100 of the 7,000 possessory interests in the state from paying property tax.


Proposed Changes


Starting in 2018, Amendment U exempts a possessory interest from property taxation if the market value of the interest is $6,000 or less. Beginning in tax year 2019 and every two years after, the $6,000 threshold will be adjusted to account for inflation.


The market value of all possessory interests in Colorado is approximately $315 million. This represents 0.04% of the total market value of all taxable property in the state.


Achieving Cost Efficiency


Supporters say Amendment U will reduce the administrative burden of collecting a tax that in many cases costs more to collect than it brings in to local governments.


The majority of possessory interests in Colorado are for agricultural leases, many of which are charged less than $10 in property taxes. The cost of administering the tax - mailing notices, maintaining tax rolls, collecting and enforcing the tax - often exceeds this amount.


Fiscal Impact


Amendment U is expected to reduce property taxes for all local governments statewide by up to $125,000 per year beginning in budget year 2018-2019.


Some county governments may experience cost savings as a result of fewer properties to assess and fewer tax notifications to process. Costs will only be saved in counties that assess property taxes on possessory interests with an actual value of $6,000 or less.