Explanation of Property Taxes
The major job of the Assessor’s Office is to DISCOVER, CLASSIFY, LIST and
VALUE property. After having “Discovered” the property it is “Classified”; i.e.
Commercial, Residential, etc., then it is “Listed” and subsequently “Valued”.
The Assessor’s Office performs the valuation of your property. The valuation
takes the form of an estimate of the Actual Value (AV) shown on your Notice of
Value (NOV). The AV is computed using a mathematical model of the housing
market, including vacant land. This is called a market model because actual
market sales are used to build the model. For tax year 2009, in compliance with
the Colorado Revised Statutes and the Constitution of the State of Colorado, the
properties must have sold between July 1, 2006 and June 30, 2008. However, if an
insufficient number of sales occurred during the data collection period, the
assessor is authorized to analyze sales that occurred up to five years preceding
June 30, 2008. This was the case for vacant land (4 Years) and commercial
property (5 Years) within Teller County. All sales values must be time trended
to June 30, 2008. Time trending is a method of adjusting the selling prices, so
that all sales are valued as if they occurred on June 30th. Sales are analyzed
by comparing each month’s sales to determine whether or not prices are changing.
An increasing trend indicates increasing property values, a decreasing trend
shows decreasing values. If prices haven’t changed during the data collection
period, then no adjustment is made. Property is classified according to its
actual use on January 1 of the tax year. Complete revaluations are performed
only on odd numbered years. The next revaluation of the entire county will be
May 2011, using the time period of July 1, 2008 thru June 30, 2010. The even
numbered years are intervening years. During intervening years AV is not
changed, unless there is a change to the property (new construction, remodeling,
omitted, etc.). The model’s ability to predict a future selling price is
verified by using the model to predict the very sales values used to build the
model. The state audit compares the predicted values with the original values.
They must be within + or - 5%. By the time you receive your 2009 NOV, the sales
history used to compute the AV is 10 months old. Beginning July 1, 2006, we
started collecting sales information on the residential properties that sold
through June 30, 2008. Next, the sales data is adjusted to the collection ending
date of June 30, 2008. Subsequently, the model (mathematical formula) is used to
compute the Actual Values of all properties. A part of this process is noting
the characteristics of each property. For example the location, land size,
livable square feet, number of bath rooms, etc. All told, there are over 60
different property characteristics. In a neighborhood (location), a given
characteristic may or may not have a significant influence on the market model.
Having derived the market model and subsequently computed the Actual Values,
the next step is to calculate the Assessed Value. The Assessed Value is computed
by the following formula: AV x Assessment Rate = Assessed Value. The Assessment
Rate is established by the State of Colorado. Currently, 7.96% for residential
property and 29% for all other types of property. For example: If the Actual
Value of a residential property is $200,000, then the Assessed Value would be
$200,000 x 0.0796 = $15,920, rounded to the nearest $10. The Tax Due is computed
by multiplying the Assessed Value by the approved Mill Levy. The Mill Levy is
defined as the tax per thousand dollars of assessed value. Using the values from
the last example, tax due equals $15,920.00 x 87.326/1000 = $1,390.23, rounded
to the nearest cent. The Assessor’s Office computes the Tax Roll for the
Treasurer, who then sends out the tax bills. Each time a ballot issue that has a
financial impact is approved, a Mill Levy may be changed. The Board of Directors
of the Taxing Authorities set the exact Mill Levy (within the approved limits)
which in turn is certified to the Assessor’s Office by the County Board of
Commissioners. In this way the tax formula becomes; Actual Value x Assessment
Rate x Mill Levy/1000 = TAX DUE. The AV is the only value set by the Assessor’s
Office. Assessment rates are controlled by the state, in compliance with the
Gallagher Amendment. The amendment states that approximately 45% of all property
tax revenue shall come from residential properties. The remaining 55% comes from
all other classes of property. The residential assessment rate (7.96%) is set by
the state, so that 45% of total property tax revenue comes from residential
property.
Remember, your share of taxes is based on the assessed value of your property
relative to the total value of all assessed property. When the value of property
changes, its value compared to all other property may increase or decrease.
Those with an increasing relative value pay more. Those with decreasing relative
value pay less. In the final analysis, taxes avoided by one tax payer must be
paid by other tax payers. The tax revenue approved by the voters does not change
with changes in assessed value, it remains the same. A change in assessed value
does not automatically change the taxes due. A reduction in Mill Levy can be
used to offset an increase in value. The goal remains fair and equal taxation
for all, according to value, so that each property owner will pay a fair share
of taxes. If you disagree with the AV listed on your NOV, you must file a real
property protest May 1st thru June 1, personal property protests must be filed
on or before June 30. I will make a decision on your protest and mail a Notice
of Determination (NOD) on June 30th for all real property and on July 10th for
personal property. If you are dissatisfied with my decision on the NOD, you may
appeal to the County Board of Equalization (CBOE) by July 15th for real property
and by July 20th for personal property. The CBOE will conduct hearings through
August 5th. If you are dissatisfied with the CBOE decision you may appeal to an
Arbitrator, the District Court, or the Board of Assessment Appeals (BAA) within
30 days of the date of the decision. In compliance with Title 12, Article 61,
Part 7, Colorado Revised Statutes, essentially all of your Assessor’s Office
staff are Registered, Licensed, Certified Residential Appraisers, or Certified
General Appraisers. We stand ready to help you in any way possible. Our goal and
commitment to you, is fair and equitable property assessment. Voters approve the
amount of property tax revenue which in turn is certified by the various taxing
authority boards. Our job is to make sure that each property owner pays a fair
share of the approved tax, based on the value of their property. No more and no
less.
Thank you for taking the time and effort to read this note. It is hoped, it
will help in understanding the property tax code and procedures. For additional
clarification/information please phone (719) 689-2941.
Tom King
Teller County Assessor
PS: Recall that residential property is valued at market on June 30, 2008.
Changes that occurred after that date will not be reflected on the 2009 NOV,
they will be reflected on the 2011 NOV. Even though an individual property value
may decline during the data collection period (7/1/2006 – 6/30/2008) its tax may
increase due to an increase in its total Mill Levy. Once again the formula for
Property Tax Due is: Actual Value (Estimated Market Value (Assessor’s Office)) x
Assessment Rate (set by the (State Legislature and approved by the Voters)) at
7.97%) x Mill Levy/1000 (Certified by the (Taxing Authority Boards approved by
Voters)) = Tax Due.