Colorado revalues properties every other year, so the odd-numbered years can bring about a significant change in the amount of real estate taxes on your property for the next two years. This year, the change might seem especially harsh as property taxes have increased substantially across the state, even though current market prices are softening. This is true for both commercial and residential properties, which have increased anywhere from 20 to 50 percent in many counties across Colorado, though the statewide average is around 17 percent. Statewide, Colorado Public Radio reports that industrial property values have increased roughly 20 percent, while oil and gas properties have increased at least 38 percent.

The situation that is occurring now is a result of the steadily increasing property values during 2017 and 2018 and the fact that property tax value is not the current market value of your property. The property tax value is based on prior sales from the 18 months leading up to June 2018. This does not mean that you must accept the increase in your property taxes. If you think your property has been overvalued, you have the opportunity to appeal the assessment. This appeal of the valuation of your property can not be an arbitrary appeal based on your “feelings of value”. You will have to provide evidence sufficient to convince the various appeal bards that their assessment of value is not supported by comparable sales.

Here are six tips to strengthen your appeal and give it the best chance for success:

1. Deadlines are important. In order to appeal your taxes, you must submit your information by June 1, 2019. The window to appeal is small, but most counties in Colorado now have online forms that you can fill out and submit to get your appeal started.
2. Use sales from the right years. For 2019’s property taxes, you must use comparable sales data from prior to June 30, 2018 and you cannot use sales that are more than 5 years old unless there are extenuating circumstances. The assessor will typically use sales from within 18 months or 2 years prior to June 30, 2018, unless there aren’t enough sales from that period.
3. Check that the assessor used the correct information. Is your commercial property properly classified? Does your house have the correct number of rooms? Is the square footage of the property accurate? If your office building is listed as mixed use, or your house is listed as 5 bedrooms instead of 4, or the square footage is off by a substantial amount, it can have a real impact on how your property should have been valued.
4. For residential properties, use the average to your advantage. The county calculates averages for residential properties by neighborhood, but averages can lie. If your house is assessed at a value above the average, but you can show that it is more like the houses below the average, then you can reduce your tax burden.
5. For commercial properties, consider both comparable sales and income produced. If your commercial property is income producing then you need to use both the sales approach and the income approach in your appeal to show that your property has been overvalued. If you can show that the assessor overestimated the income-producing potential of your property, then you have a good chance with your appeal. Use the NOI (net operating income) and the capitalization rate to show this. When using the sales approach, look closely at the properties being used by the Assessor as comparables. There is less uniformity among commercial properties and neighborhoods than among residential neighborhoods.
6. Make your appeal with accurate facts. For a successful appeal, you need at least three comparable sales showing your home has been overvalued, or both comparable sales and the income approach for your commercial property. When putting together your residential appeal, get your comparable sales from the county rather than websites such as Zillow as they can have inaccurate square footages and other important information that affects the assessed value. For a commercial appeal, use CRE tools and websites to find out asking rents and other details on potential comparables to find the best match possible for your property. 

Appealing your property taxes takes significant diligence but making the effort can end up saving you significant amounts of money by keeping your real estate taxes as low as possible.

References:

Markus, Ben. “In the Denver Market, Your Home’s Value May Be Rising, But Your Taxes Could Be Too.” Colorado Public Radio, 24 April 2019. https://www.cpr.org/news/story/in-the-denver-market-your-home-value-may-be-rising-but-so-could-your-taxes.