Karla Painter, Realtor®
July 6, 2023
On May 16, 2023, Governor Jared Polis signed a Senate Bill into law that temporarily cuts property taxes, offering some relief to homeowners in 2023 and 2024. The purpose of the legislation is to reduce the burden of these taxes on residential and commercial property owners alike. So how does this bill impact you as a homeowner?
What the Bill Says
SB22-238 will reduce assessment rates for residential, including multi-family, properties from 6.95% to 6.765%. The final assessment will also be decreased by $15,000. This is in effect for 2023 and will continue through 2024. How big of a decrease is this truly? Let’s take a look at a brief example:
John’s home is valued at $750,000. In 2022, John’s taxes would have been assessed at 6.95%.
$750,000 x 0.0695 = $52,125
If the local mill levy is 80 mils, John would owe:
$52,125 x 80 mils = $4,170
Now let’s look at 2023. John’s assessment fee has dropped to 6.765% with an additional $15,000 removed before the assessment. John now owes:
$750,000 – $15,000 = $735,000
$735,000 x 0.06765 = $49,722.75
$49,722.75 x 80 mils = $3,977.82
That is $192.18 in savings. While this savings might not be life-changing, it is a step towards lower taxation.
How Does This Bill Benefit Homeowners?
While property taxes may continue to rise, this bill does provide some respite by reducing assessment rates. It is important as a homeowner to stay informed of changes to legislation so you can plan ahead for future tax seasons.
Are There Any Downsides?
As mentioned above, this plan is only temporary. Unless new legislation is passed, the tax assessment rate will return to 7.15% in 2025. Prior to 2020, the Gallagher Amendment made sure that assessment rates drop as home prices increase. As this is no longer the case since the amendment was terminated, it is possible we will see assessment rates continue to increase as home prices rise across the state.
Looking Forward
Although SB22-23 is only temporary, it is a step towards tax relief for Colorado homeowners. Our team will continue to monitor further legislation to keep you updated on the real estate landscape around Denver.