When Douglas County residents open their property tax bills in January, they might be shocked at the figure on the paper.
At least that's what Assessor Lisa Frizell is worried about.
“It's going to be a problem,” she said.
Now, about two months out, she's trying to ready residents by encouraging them to check on their property values using an online portal and if necessary, challenge their home's valuation. While the appeal period ended June 1, residents can rebut their tax bills by filing an abatement beginning January 1.
“They need to be prepared for the tax bill in January because they could be surprised,” she said.
On average, single-family home values saw an increase of nearly 15% and attached homes, such as condos and town homes, rose by 16%. But home values aren't the only part of the equation.
Understanding the reason for the stark jump in property taxes requires a breakdown of how the fees are determined.
“I want them to understand what goes into the calculation,” Frizell said. “It's not just property value.”
There are three elements that go into the formula that determines a home's property taxes: the house's value, the assessment rate, and the mill levies that will be set in mid-December by various taxing authorities where the home is located. All told, there are about 300 different taxing authorities in Douglas County, such as the school district, South Metro Fire Rescue and various metro districts.
A home's valuation, which is reassessed by the county every two years, is based solely on past sales of comparable houses, she said. The valuations in Douglas County this year are based on about 20,000 home sales during a 24-month period, which began in July 2016 and ended at the end of June 2018.
Since 2012, home values have generally been steadily increasing. So, what makes this year's taxes the source of shock? The answer is: the other parts of the equation.
Once determined, a home's valuation is multiplied by the assessment rate, which is set by the state, to get the assessed value. The final step is to multiply the assessed value by the mill levies on the home.
From 2003 to 2016, the state's assessment rate remained at 7.96%, and in 2017, it was reduced to 7.2%. That same year, the Colorado Legislative Council staff predicted that in 2019, the rate would fall by 15% to a rate of 6.11%. Instead, it went down less than 1% to 7.15%.
There are several reasons that this rate didn't drop as much as predicted, including the contrast between growing values in the metro area and the more stagnant growth in rest of the state, Frizell said. The Gallagher Amendment, which requires commercial properties to fund 55% of the state's property taxes and residential to pay about 45%, also had an effect.
Under the Gallagher Amendment, in order for the rate to fall to what was predicted, home values must rise faster than commercial property values. But as business, industrial properties and oil and gas values throughout the state see large increases, the mandated 45/55 ratio applies upward pressure on the state's residential assessment rate.
While most of the tax equation is finalized, there are a few steps that can be taken to put the costs back into the control of the taxpayers.
First, homeowners can use the Douglas County property assessment site to check their home's valuation at Douglas.co.us/assessor. There, they can see the home's tentative property taxes for the year, its history of values and taxes and the various tax authorities over the property.
These tentative taxes are based on mill levies from last year, which may not be the same this year.
The site also allows homeowners to compare their home's valuation to those in the same area with similar square footage, style, age and quality. Those who believe their home's value or taxes are incorrect can refute them through filing an abatement beginning Jan. 1. The process, which can result in a refund, does not change the due date of taxes owed and can take up to six months. More information on abatements is available on the Douglas County website by searching “abatement process.”
Second, homeowners can engage with their taxing entities, which set the mill levies, about the rates they select. While most of the elements of property tax have been determined, mill levies will not be reported to the board of county commissioners until Dec. 15.
A pie chart of each home's mill levies is also available on the property assessment site along with contact information for the taxing entities.
If tax authorities keep their rates the same this year, they will actually be taking in more revenue than in years past because of the increase in home values. They're not required to reduce their rate to bring in the same amount as last year, Frizell said.
“I strongly urge all property owners to be part of the budget hearing process for these tax authorities that provide services to their property owners,” Frizell said. “So they can have a voice.”
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