How Property Taxes are Determined
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Photo courtesy of Bev Alexander
Property taxes are determined by multiplying the assessed (taxable) value of your property by the tax rate. The tax rates are set by local government entities.
Assessed values are derived by multiplying the actual value of the property by 7.96% for residential property and by 29% for other property. The residential assessment percentage is subject to change by the Colorado Legislature, as required by the Gallagher amendment, each odd-numbered year. By constitutional mandate, the change in percentage maintains the present balance of the tax burden between residential and all other taxpayers.
How Tax Rates are Established
Each year county commissioners, city councils, school boards and special districts (taxing entities) hold budget meetings to determine the dollars needed for the following year’s operations. These hearings are usually held in September or October – check the local newspaper for the hearing dates. Attend budget meetings to become informed about the quality and cost of services in your area.
Each taxing entity determines what revenues will be required for operations during the upcoming year. The required revenues are then divided by the total assessed value of all property in the taxing entity’s area to determine the Tax Rate and Mill Levy per entity.
The Tax Rate and Mill Levy are two different methods of expressing the same information. A Tax Rate is expressed as a percentage, whereas a Mill Levy is expressed in mills (1 mill = one dollar of property tax for every $1,000 of assessed value)
In an example, say the total assessed value for the county is $100,000,000. The county commissioners determine the annual budget for the county to be $1,250,000. This budgeted amount is funded by tax revenue, and is divided by the assessed value to get to the Tax Rate or Mill Levy: $1,250,000 (tax revenue) divided by $100,000,000 (assessed value) = 1.250% (Tax Rate) or 12.50 Mills (Mill Levy).
Calculating Property Taxes
Actual Value x Assessment Rate = Assessed Value.
Assessed Value x Mill Levy = Taxes Dues.
For example, take a residential home with an actual value of $100,000. To derive the assessed value, multiply the actual value by the assessment rate: $100,000 x 7.96% = $7,960.
Then, multiple the assessed value by the Mill Levy (for this example, we’ll use .050 as the Mill Levy) to determine the property tax: $7,960 x .050 = $398.00.
Paying Property Taxes
The county treasurer is responsible for mailing and collecting the property taxes. Each year, the treasurer sends the property tax bills to taxpayers after January 1st.