The Colorado Legislature approved a temporary property tax break for owners of apartments effective for tax years 2022, payable 2023, and 2023, payable 2024.
Senate Bill 21-293 also grants property tax breaks for single family homeowners, farmers, ranchers, and renewable energy producers. Taxpayers can expect to see the property tax reduction when tax bills are mailed in 2023 and 2024.
Assessment Ratios Lowered
The change in law reduces the ratio on which property taxes are determined. One of the largest drops is in property classified as Multifamily Residential, which includes apartments, senior housing, duplexes, and triplexes. Here, the assessment ratio will adjust from 7.15% of Market Value to 6.80% of Market Value as determined by the local county assessor. In most cases, this change will result in a property tax reduction of 5% for apartment properties.
Similarly, residential homeowners can expect a reduction in property taxes of approximately 3% due to a change in the assessment ratio from 7.15% to 6.95%.
Farmers and ranchers, as well as renewable energy producers, will see a drop of approximately 9%. These properties previously assessed at 29% will see a change to 26.4% for 2022 and 2023.
Appreciating Market
In passing this law, Colorado Lawmakers hoped to curb rising property taxes due to the increases in property values, especially Multifamily Residential (apartments) and Single-Family Residences. One of the bill’s sponsors said, “We are bringing legislation to address an immediate problem …the rapidly changing and rapidly appreciating property market. We need to act on that this session.”
Others hoped the reduction in the property tax will provide some relief to renters in the form of lower monthly rents. Lawmakers will take a “wait and see approach” for the two years before pursuing any additional changes in the way property taxes are levied.
Two-Year Window
The change in assessment ratios is effective for only two years. In 2024, for taxes payable in 2025, the reduced ratios will return to pre-2022 levels. (See the Property Tax Classification and Assessment Rate Table below).
The proposed valuation and property tax calculation for an apartment property below illustrates the tax savings due to the assessment change in Senate Bill 21-293.
TECHNICAL INFORMATION CONTACTS:
Shane Moncrief
Principal
Ryan
404.942.6377
shane.moncrief@ryan.com
Alex Martinez
Principal Consultant
303.590.9151
The material presented in this communication is intended to provide general information only and should solely be seen as broad guidance and not directed to the particular facts or circumstances of any individual who may read this publication. No liability is accepted for acts or omissions taken in reliance upon the content of this piece. Before taking (or not taking) any action, readers should seek professional advice specific to their situation from Ryan, LLC or other tax professionals. For additional information about this topic, please contact us at info@ryan.com.
- Topics
- Shane Moncrief
- Property Tax
- Colorado