Property Taxes - Bernadette Melton

As one of the two things in life that are certain, we all have to deal with them and it helps to know what they’re about. Yep, I’m talking about property taxes.

Why the increases?

You probably received your Property Tax Statement in January, and if you looked it over then you most likely noticed that your property taxes went up as compared to a few years ago. I know ours did! This is largely because our property values have risen dramatically over the past few years.

How do they figure out what I owe?

Property taxes are reassessed every two years and are based on sales of comparable properties within your local real estate market. The valuation period for 2017/18 taxes was from 7/1/14 to 6/30/16, but most counties pull comparable property sales from 1/1/15 to 6/30/16. The most important factors they consider are above ground square footage, # bathrooms, year built, and finished basement square feet. Property sold prices are time adjusted from the date of sale up to 6/30/16, which basically means they multiply the sold price of the home by a factor to account for when during that time period the home was sold. So the sold price you see is not necessarily considered the value of the home. You can find charts online that will give you the time adjustment factors, for example if you are in Boulder county you can find more information at Boulder time trending. This is one of the best websites I’ve found for explaining things so even if you don’t live in Boulder county you may still want to check it out. Each county will have their own website for the county assessors office.

What’s the bottom line?

In Colorado we pay taxes in arrears, which means that our 2018 tax bill becomes due in 2019, so the taxes we’re paying now are for last year. This also means that your monthly mortgage payment may have changed. Mortgage companies typically collect extra money every month to put into escrow to pay your property taxes. If they don’t then there could be a tax lien placed on your home that could cause a foreclosure, something mortgage companies don’t want. So if there’s a shortage in your escrow fund because they didn’t collect enough money throughout the year, you may need to pay additional money each month to make up for that shortage. Then, the mortgage company could also increase the payments to help add to that escrow fund for next year’s taxes in order to prevent an additional shortage next year. Bottom line: your mortgage payment could go up significantly if your tax burden went up!

Ok, so my taxes went up, what do I do now?

First, be sure that the county has all the correct information (bathrooms, square footage, etc) because that’s what they are taxing you on, and you could be paying more if the information is inaccurate. It is possible to appeal your tax valuation, sometimes it’s successful and sometimes it’s not. The first appeal deadline will be listed on your assessment, but if you miss that deadline you can still appeal. There are specific appeals procedures on the notice that came with your tax bill, you can appeal in person, via mail, or online. If you are in Boulder county, you can appeal here: Boulder County Appeals. If you are in Weld county, you can appeal here: Weld County Appeals. If you are in Adams county, you can appeal here: Adams County Appeals.

There are property tax exemptions available for senior citizens, disabled veterans, and surviving spouses of those who were previously granted the exemption. The deadline for senior citizen exemptions is July 15, while the deadline for disabled veterans is July 1.

Sometimes an increased tax rate means an increase in mortgage payments that become no longer affordable. This is especially true in neighborhoods with metro district taxes. Metro districts can be the highest percentage on the overall tax bill and can make a huge difference in affordability across neighborhoods. For example, in an area with a metro district tax, the taxes can be almost double that of a neighboring area without one. So if one house in a neighborhood pays taxes of $2400/year, then they pay about $200/month to their mortgage company to cover their taxes. If that same house was in a neighborhood with a metro district tax, then their taxes could be $4800/year, which means they’re paying roughly $400/month towards their taxes. It could be worth it depending on the neighborhood and the amenities provided, but it could also become unaffordable over time. If your tax bill makes living in one area no longer affordable, sometimes it makes sense to move to another area with a lower tax burden and therefore lower monthly mortgage payments.

Got Questions?

One other important thing to note is that comparable properties for tax appeal purposes are not the same as for a current market analysis. The homes are of similar characteristics, but the time periods are not compatible. If you’d like to know what your home is worth in this current market, please let me know and I can get you that information. When I look at market properties, I look at the highest values possible, when looking at tax properties I look at the lowest values possible. So you can see there is a big difference!