America's Property Tax Advisor

Some Colorado Properties Get Temporary
Tax Break

BY ALEX MARTINEZ, DENVER, JANUARY 2022

The Colorado Legislature approved a temporary property tax break for owners of apartments effective for tax years 2022, payable 2023, and 2023, payable 2024.

 

Senate Bill 21-293 also grants property tax breaks for single family homeowners, farmers, ranchers, and renewable energy producers. Taxpayers can expect to see the property tax reduction when tax bills are mailed in 2023 and 2024.

 

Assessment Ratios Lowered

 

The change in law reduces the ratio on which property taxes are determined. One of the largest drops is in property classified as Multifamily Residential, which includes apartments, senior housing, duplexes, and triplexes. Here, the assessment ratio will adjust from 7.15% of Market Value to 6.80% of Market Value as determined by the local county assessor. In most cases, this change will result in a property tax reduction of 5% for apartment properties.

 

Similarly, residential homeowners can expect a reduction in property taxes of approximately 3% due to a change in the assessment ratio from 7.15% to 6.95%.

 

Farmers and ranchers, as well as renewable energy producers, will see a drop of approximately 9%. These properties previously assessed at 29% will see a change to 26.4% for 2022 and 2023.

 

Appreciating Market

 

In passing this law, Colorado Lawmakers hoped to curb rising property taxes due to the increases in property values, especially Multifamily Residential (apartments) and Single-Family Residences. One of the bill’s sponsors said, “We are bringing legislation to address an immediate problem …the rapidly changing and rapidly appreciating property market. We need to act on that this session.”

 

Others hoped the reduction in the property tax will provide some relief to renters in the form of lower monthly rents. Lawmakers will take a “wait and see approach” for the two years before pursuing any additional changes in the way property taxes are levied.

 

Two-Year Window

 

The change in assessment ratios is effective for only two years. In 2024, for taxes payable in 2025, the reduced ratios will return to pre-2022 levels. (See the Property Tax Classification and Assessment Rate Table below).

 

 

Property Tax Classification and
Assessment Rate

 

 

 

2021

2022/23

Tax Savings

 

 

NON-RESIDENTIAL

 

 

 

 

 

 

Hotels, Motels & B&B's

29%

29%

No change

 

 

Renewable Energy

29%

26.4%

9%

 

 

Agricultural Property

29%

26.4%

9%

 

 

Commercial & Vacant Land

29%

29%

No change

 

 

Oil & Gas

87.5%

87.5%

No change

 

 

Business Personal Property

29%

29%

No change

 

RESIDENTIAL

 

 

 

 

 

 

Multi-Family (Apartments)

7.15%

6.8%

5%

 

 

Single-Family Residential

7.15%

6.95%

3%

 

The proposed valuation and property tax calculation for an apartment property below illustrates the tax savings due to the assessment change in Senate Bill 21-293.

 

 

Multi-Family Residential Proposed
Tax Savings due to SB 21-293

 
           

 

Denver, CO - Sample Multi-Family Residential Apartments

 
 

 

 

 

 

 

 

 

Actual
Value

2021
Tax Year

2022
Tax Year

 

 

Assessment Ratio

 

7.15%

6.80%

 

 

 

 

 

 

 

 

Land

$33,687,500

$2,408,656

$2,290,750

 

 

Improvements

$62,562,500

$4,473,219

$4,254,250

 

 

Total

$96,250,000

$6,881,875

$6,545,000

 

 

 

 

 

 

 

 

Mill Levy

 

0.074618

0.074618

 

 

 

 

 

 

 

 

Property Taxes

 

$513,512

$488,375

 

 

 

 

 

 

 

 

Tax Savings

 

 

$25,137 (5%)