More Tax Relief Coming... and an interesting experiment

Two bills were passed in the last 18 months that lower the state’s assessment rates (among other things), which is the percentage applied to a property's actual value to determine the assessed amount upon which a mill levy is imposed.

The most recent bill, SB 22-238, is particularly generous in that it lowers rates further as well as providing a $15,000-$30,000 deduction to taxable value for the 2023 tax year! Now remember, 2023 is an odd numbered year so assessors are required to revalue all taxable property in their county. With that being said, consider how well the real estate market has been doing since July 1, 2020 to present day (ending June 30, 2022). We've seen unprecedented gains in value as a result of low inventory, strong buying power, and the shift to remote working! I believe that our legislators in Denver see this and want to provide some temporary relief and they've been very creative in doing just that.

Given this generosity, it also requires that the state reimburse local governments for a portion of the resulting property tax revenue deductions. In doing this, the legislation has tasked county treasurers to calculate the 2023 property tax revenue reduction for their county and submit these calculations to the state property tax administrator. Then, for the 2024 tax year, the assessment rate for single family residential property ONLY will be set at a level determined by the state property tax administrator, such that the projected total revenue lost as a result of the bill is $700 million over the two year period of 2023-2024. Seems like an experiment to me! It will be interesting to see how things turn out around this time next year.

Here's a breakdown by tax year of some of the changes:

For tax year 2022, SB 21-293 calls for a temporary reduction to the residential assessment rate, and creates a new “multi-family” classification for residential properties.

  • Assessment rate of multi-family residential properties reduced from 7.15% to 6.8%.

  • Assessment rate of all other residential properties reduced from 7.15% to 6.95%.

  • Assessment rate of real and personal property that is classified as agricultural property or renewable energy production property reduced from 29% to 26.4%

For tax year 2023, SB 22-238 makes more temporary changes to property tax assessment rates as well as a reduction to taxable value.

For tax year 2024, SB 22-238 reverts the assessment rate of multi-family residential property back to 6.8% while calling for the property tax administrator to determine the rate for single family residential.

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