Greetings and Happy New Year from the Moffat County Assessor’s Office….
As we head into 2022, I felt it necessary to let you know of some notable changes coming this year and how they will affect your future assessed values and taxes. These upcoming changes are a direct result of the passage of SB293 and HB1312 last year and the failure of Initiative 27 in the November ballot last year. All three would have had a direct effect on you, the taxpayer, and our tax districts for 2022 and beyond, but only two now have the force of law.
Before we focus on SB293 and the failed Initiative 27, we first need a brief history lesson to help you understand how we got here. In November 2020, Colorado voters repealed the Gallagher Amendment which historically established “assessment rates” since 1982 for real and personal property. With that amendment repealed, it has now opened Pandora’s box – so to speak – and we are seeing the introduction of new legislation and future ballot measures that will attempt to guide the future of property assessment for years to come in Colorado.
SB293 and Initiative 27 were the first to be introduced. Without going into too much detail and politics of this bill and the missed vote measure, you should know that they were both written to change effective property assessment rates, but in different ways. Since the failure of Initiative 27, let’s focus on what SB293 changes and how it will affect you the taxpayer and the tax districts that are funded by your tax dollars.
SB293 was a tiered bill, but for the assessor, it effectively changes our property assessment rates for 2022 and 2023. These same rates could only have been adjusted by Gallagher in the past. So, as I noted earlier, it didn’t take long for lawmakers to act on what many perceive to be just the tip of the iceberg of change.
Before sharing with you the new tax rates that will come into effect in 2022, what is a “tax rate” and what is it used for? Once the assessor has determined the “actual value” of a property, it is then multiplied by the applicable “assessment rate” to give us what we call the “assessed value” of a property. This taxable value is then multiplied by the current factory levy, which determines your tax. From 2019 to 2021, the assessment rate for all residential properties was 7.15% and for all non-residential properties was 29%.
So here are the new tax rates set by SB293 that will go into effect in 2022…
- Renewable power generation property is reduced from 29% to 26.4% for 2022 and 2023
- Farm ownership is reduced from 29% to 26.4% for 2022 and 2023
- All other commercial properties remain at 29%
- Multi-family residential real estate is reduced from 7.15% to 6.8% for 2022 and 2023
- All other residential real estate is reduced from 7.15% to 6.95% for 2022 and 2023
- No change for mined minerals, coal, sand and gravel or oil and gas production
Please note that these changes do not affect the 2021 tax year, so any tax notices you will receive shortly are not affected by these new tax rates, but will be in effect for the tax years 2022 and 2023.
The net effects of these changes are going to be twofold. With the reduction in tax rates, many taxpayers should see a slight decrease in their taxes for the 2022 and 2023 tax years, assuming you do not have an increase in value or a change in classification during this period. Under the new residential rate, someone owning a home with a real value of $200,000 will see an estimated decrease of about $33 in tax. On the flip side though, our tax districts will also see a reduction in available taxpayer money due to these rate reductions. Early estimates indicate a potential loss of $1.6 million in assessed value in the residential sector alone. This does not include any reduction in the assessed value of vacant land, farmland and multi-family properties, which are also affected by the new assessment rates.
Now for HB21-1312 and what effects it will have on you. This bill only affects entities that are required to file personal property returns each year and was intended as a direct response to the thousands of small businesses hard hit by the effects of COVID-19 over the past two years.
Here is what has changed. Currently, the reporting threshold for personal property has been set at $7,900. It has now been increased to $50,000 – with a “twist”. Any business that declared personal property in 2021 that had an actual declared value between $7,900 and $50,000, you are now “exempt!” ” What do you say ? That’s right – exempt!
Since you are now exempt, you will not receive a tax bill this year and you will not be liable for any personal property tax liability. You will also not receive a personal property declaration unless you have already declared personal property that exceeded the $50,000 threshold in 2021. If this was the case, you are “not” exempt! You will still receive a tax notice and will need to continue filing personal property returns in the future.
By granting this exemption, it appears that tens of thousands of dollars will not be collected and will not be available to our tax districts. Not so fast, here comes the “twist”. This bill requires the state of Colorado to make up for taxes that would have been collected over the next two years. The state of Colorado will reimburse our treasurer, much the same way it does for those who qualify for the senior exemption.
By the way, there has been continued pressure here in Colorado to permanently raise the threshold to $50,000 for some time now; this can be the first step to do so. I guess we’ll wait and see.
In closing, remember that each even year is what is called an “intermediate year”. Attached with your upcoming tax notices is a brief explanation of this interim year process, as well as your rights to appeal future values of your property. This notice will also detail the process for applying for an exemption for seniors or veterans, if you qualify.
On behalf of all of us here at the Assessor’s Office, we wish each of you a safe and prosperous 2022.
Chuck Cobb, MC Evaluator.