For the last two weeks largely unwelcome postcards have made their way to Boulder County property owners. The notice from the Assessor’s office confirmed what you already knew. Your real estate property’s value has increased significantly over the last two years. You’re not alone as the increase of the average Boulder County residence exceeded 20 percent compared to the last assessment two years ago.
While some homeowners were elated to see their real estate appreciate, for many it has turned to fear of ballooning property taxes making homeownership less affordable. This is unwelcome news, especially for those who stretched to purchase their house in the first place or are living on a fixed income.
But it’s not a certainty that your property tax will go up, even if the taxable value has increased significantly. Plus there are options to contest your home’s taxable value that could help reduce your tax bill. Consider these points when thinking about next year’s property tax bill.
Property Values Are Just One Part of the Tax Equation. If you’ve ever looked closely at your property tax bill, you’ll see three components of the tax you owe. Last week’s notice had a preliminary number for your home’s taxable value. That taxable value is then reduced by the state legislature that sets the assessment rate. That rate is scheduled to decrease from 7.96 percent to 7.2 percent because of the arcane rules of the Gallagher Amendment.
Consider a house worth $500,000 in June 2014 that has appreciated to $550,000 as of last June. The assessed value for 2017 would be 7.2 percent of $550,000, or $39,600. The value two years ago was assessed at $500,000, with an assessed value of $39,800 (using the old 7.96 percent assessment rate). So even though the property value has increased 10 percent, the assessed value used for computing taxes is largely unchanged.
The third part of the equation are the property tax rates also known as mill levies. These are billed by cities, counties, school districts, and other authorities. These tax rates will be set by this December to levels that will enable local taxing entities to meet their budgets. Their ability to raise taxes are limited by TABOR and other state laws. With the increase in Boulder County assessed values, we may see tax rates decrease come December.
In short, while one component of your property tax likely went up, the other two factors of assessment rates and property tax rates may be going down. Your property tax bill for 2017 is uncertain at this point. It’s possible you may see a property tax cut.
You Can Challenge Your Assessment. The Boulder County Assessor sent out about 119,000 Notices of Valuation. While they use sophisticated models of local comparable sales to come up with an estimated value of your property, there are bound to be mistakes with an endeavor of this scale. The postcard you received has the estimated value from June of last year. The Assessor’s office does not know that while your neighbors’ kitchens feature Sub-Zeros and solid surface countertops, yours may have a marigold colored range surrounded by chipped Formica. By documenting how the local supposedly comparable properties do not share the same level of interior condition or quality of views, you can help your case with the County.
You only have until the end of May to appeal your assessment, so if you intend to do so you should act right now. You won’t be alone as about 10 percent of assessments are appealed, with this latest round likely to go higher given the elevated rates of appreciation. Go to the Assessor’s website at BoulderCountyAssessor.org for more information including options for on line and in person appeals. Keep in mind that the number you received should reflect the June 2016 value (and not any appreciation since that time).
Seniors Get a Break. If you were 65 or older at the beginning of the year, and have owned and lived in your current residence for ten years or more, you may be eligible for the senior property tax exemption. This excludes 50 percent of the first $200,000 in home value from the property tax calculation. If your house is valued at $400,000, all things being equal your property taxes would go down 25 percent under the exemption, which is paid by the state in good budgetary times. Apply to Boulder County by July 15th to get the savings for this year and beyond.
The Silver Linings. Even if your property tax does increase, there are positive aspects to it. If it’s a rental property, you can deduct property tax on your income taxes. If it’s a personal residence and you itemize, then you may be able to deduct your property tax on your federal taxes under current law.