Property Tax
| Colorado is one of only 13 states that do not impose a state property tax. Local governmental units assess property taxes primarily to fund public school operations and local government services.
Colorado property taxes have three main components: the actual value of property, the assessment rate, and the mill levy. The local assessor establishes the actual value of the property and the property's classification (residential, commercial, personal, etc.). The Colorado Legislature determines the assessment rate, and local taxing entities determine the mill levy. To determine property tax liability for a given piece of property, a simple formula is used. First, the actual value, as determined by the local assessor, is multiplied by the assessment rate mandated by the state legislature, based on the classification assigned the property by the local assessor. The assessment rates for each property classification is as follows: |
Quick Facts
The "Economic Recovery Act" passed in June 2002 extends the life span of business personal property tax incentive agreements negotiated by cities, counties, or school districts from four to ten years, giving local communities greater leverage to attract top-notch companies. This bill also increased the maximum amount of time to 10 years that companies in terminated former enterprise zone areas may have to use "grandfather" extensions of their enterprise zone tax credits.
|
Property Class |
Assessment Rate & Method |
Residential |
7.96%* |
Commercial |
29% |
Industrial |
29% |
Personal |
29% |
Mixed-Use |
7.96% for residential portion, 29% for commercial portion |
Vacant Land |
29% |
Agricultural |
29%, with actual value based on capitalizing the average net income for the preceding 10 years at the cap rate of 13% (statutory) |
Producing Mines |
Previous year's production value, 25% of gross proceeds, or 100% of net proceeds, whichever is greater |
Oil and Gas Leaseholds and Lands (Primary Recovery) |
87.5% of oil or gas sold or transported from premises, with modifications |
Oil and Gas Leaseholds and Lands (Secondary and Tertiary Recovery) |
75% of oil or gas sold or transported from premises, with modifications |
State Assessed Property |
29% |
Exempt Property |
Assessed at appropriate rate but not taxed |
*Residential assessment rate fluctuates from year to year due to a statutory formula that specifies shares of revenue from commercial versus residential property
The figure resulting from that calculation is the assessed value of the property.
Colorado municipalities' property tax rates are expressed in mills, or 1/1000th of a dollar. The tax rate is the decimal equivalent of a locality's mill levy. The statewide average local mill levy in 2005 was 75.189 mills, or 0.075189, or 7.5189%. This figure includes counties, municipalities, school districts, and other special districts.
The property tax is then calculated by multiplying the assessed value by the property tax rate as derived from the local mill levy. In other words, the entire calculation is:
Actual Value of Property X Assessment Rate X Mill Levy X 0.001 = Property Tax
Colorado does not tax inventories, intangibles, or goods in transit.
Additional Information
Business real property is taxed at a standard 29% assessment rate, with the exception of producing mines and oil and gas leaseholds and lands, as described above. Personal property (machinery and equipment) used in commercial and industrial operations is also assessed at 29% of actual value, based on replacement cost, expected economic life of the asset and other factors. (Business personal property with an economic life of one year or less, or with acquisition cost of $250 or less, is exempt from taxation.)
Computer and telecommunications equipment have accelerated depreciation schedules and reduced residual values. Local governments, including municipalities, counties and school districts, have the option to negotiate up to 50% rebate or credit on their portion of personal property tax as an economic development incentive.
Provided that state revenues produce a surplus, business taxpayers will receive a credit against their state corporate income tax for business personal property taxes paid to Colorado municipalities.
For more information on property taxes in Colorado, see the Department of Local Affairs web site:
http://www.dola.state.co.us/propertytax/index.htm
http://www.dola.state.co.us/is/cedishom.htm