Property Tax 101

Why is it that after “’Tis the season to be jolly,” the tax man cometh?Talk about bad timing …Property tax bills have been mailed, and it is important to understand what your tax statement means.

Three components are calculated to determine your property tax: the actual property value, the base tax rate used to determine “assessed values,” and the tax levies imposed by various taxing entities such as the school districts and public services. “Mil” is derived from the word for a thousand; a mil represents 1/1000.Thus, a levy of 44 mils is 44/1000 or .044.

The process begins with the Boulder County Assessor’s office, which appraises residential and commercial property as well as vacant land.Every year, each county appraiser evaluates 7500 properties.The notices of valuation are mailed in May but reflect the “actual value” established by the appraisers as of Jan. 1; therefore valuations may differ from the current market value.

Property owners can protest the assessed values of their property between May 1 and May 30, during which time the assessor’s office is willing to reconsider the assessment.According to Sam Forsyth, Chief Deputy Assessor, only seven percent of property owners request reconsideration.“We feel that means we do a reasonably good job of assessing values in Boulder County.”

The base tax rate is the percentage of actual value used to determine the “assessed values” on your tax notice.This rate is set by law and the state constitution.The rate is different for residential and commercial properties.

The law provides that the residential percentage must be adjusted each year so that residential property statewide does not bear any more property tax burden in proportion to commercial property than it did in 1985.

As a result, while net property taxes have increased over the last several years, the base tax rate for residential property has actually decreased from 30 percent in 1982 to the current rate of 9.74 percent.

The tax bill reflects actual values, assessed values and the mils levied by each governmental entity.

Once the appraisers assess the values for Boulder County property, they provide a total valuation to the taxing entities, which determine the mil levies needed to support their operations.Under the TABOR amendment, these taxing entities cannot collect more taxes than the previous year, adjusted by inflation and population growth, without voter approval.The assessor’s office can provide a detailed summary of levies, showing the entity, total valuation of properties in its taxing district and the total revenue provided to the entity.

Once the mil levies are determined by the taxing entities, the County Treasurer’s office sends out the tax bills early in the year following the assessment.Once the revenues are collected by the Treasurer’s office in April, they are distributed to the county, the schools, water districts and other entities.

Using the actual value, the base tax rate and the mil levy, the equation looks something like this:

Commercial property, farmland and vacant land are a different story.The base tax rate for those properties is 29 percent.Assuming the same $200,000 value as in the example above, the net tax would be a whopping $4,266.

Although the residential tax rate has decreased, most property owners say their net tax has increased.This rise is due to the increased mil levies and higher market values of property in this area.

According to Forsyth, the assessor’s office spends 90 percent of its time educating property owners about the appraisal and taxing process.“The remaining 10 percent of the time,” he said, “we learn from people.We want to know what they think, and what we can do to help them.”