We’ve all been enjoying a very mild winter so far this year. Well, perhaps I shouldn’t say “all,” because the skiers are starting to wish for some more powder! We are very lucky to still have the mountain snowpack at 107% of average. We stocked up early in the year with some December storms which fell as slushy rain in town. It was deep snow up high, so our runoff is still looking pretty strong despite the recent weeks of sunny, blue skies.
In other local news, if you own property in Archuleta County, you should have recently received your property tax notice. Many people have questions about what exactly is found on this statement, and about how property taxes work in general, so I thought it would be useful to explore the mechanics and rules governing property taxes in this newsletter.
The notice which you just received is for your 2010 taxes (which are paid in 2011.) These taxes are still based on values resulting from sales between January 1, 2007, and June 30, 2008. So, the check you write in 2011 is a result of sales which happened four years ago! It’s a crazy system, but it all comes down from the State of Colorado, so there’s not much our local Assessor can do about it.
In May of this year, you’ll receive a new notice of valuation based on sales which occurred between July 1, 2008 and June 30, 2010. (The next valuation period was expanded by six months due to lack of qualified sales.) This new valuation will be used to set your 2011 taxes, which will be paid in 2012. These new valuations are widely expected to be lower than the previous valuations. Real world market conditions were certainly worse in 2009 than in 2007. However, how much lower they’ll be is a topic of much debate. The Assessor’s office is not willing to release any information about the upcoming valuations at this time. Keep an eye on this newsletter and on the Pagosa Springs Sun for further information, and watch for your new property valuation in May.
If you look at the top, right corner of your property tax notice, you’ll see two values: actual value and assessed value. Actual value is what the county thinks your property is worth, or at least what it used to be worth in 2008. Assessed value is also called the “taxable value.” This is the number upon which your taxes are based, and to understand where it comes from, we have to go all the way back to 1982.
In 1982, the Colorado Constitution was amended to include the Gallagher Amendment, which fixed the ratio of all property taxes paid by residential property owners. Under the Gallagher Amendment, residential property owners pay 45% of all property taxes statewide. The remaining 55% of taxes are paid by owners of all other properties, including commercial and vacant land.
To achieve this goal, commercial and vacant properties are “assessed” at a rate of 29%. Residential properties are assessed at a floating rate which is adjusted every two years in order to maintain the 45/55 ratio mandated by the Gallagher Amendment. The residential assessment rate is currently 7.96%, but it has been as high as 21% in the past.
To figure out your assessed value, multiply the actual value by the assessment rate. So, if you own a home with an actual value of $100,000, you will have an assessed value of $7,960. If you have a piece of vacant land worth $100,000, your assessed value will be $29,000. The resulting taxes on the vacant land will be much, much higher, thanks to a higher assessed value and the Gallagher Amendment.
To calculate your property taxes, you’ll next need to look at the “tax levy,” which is found in the top, left corner of your property tax notice. Each taxing authority, like the school district or the water district or the County, has a corresponding “tax levy” expressed in mills. A mill is equal to one-tenth of a percent. (23.5 mills = 2.35%) Tax levies are set by various local and state government bodies. The local Assessor’s office does not control tax levies, only valuations. Which tax levies apply to you is determined by the location of your property. For example, if you live in the Upper San Juan Library District, you have to pay the library tax levy of 1.509 mills.
Your actual tax bill is determined by multiplying the assessed value and the tax levy. Let’s say the $100,000 home in the previous example is located within the library district. If you multiply $7,960 times 1.509 mills (0.1509%), you get a tax bill of $12.01 for the library. The piece of vacant land assessed at the higher rate owes $43.76 to the library.
You can find all your various taxes calculated for you in the top, center of your property tax notice. All these taxes are added together to get your total tax bill. The first half of your 2010 taxes is due February 28, 2011, with the remaining half due June 15, 2011. Alternately, you can pay the entire amount due on April 30, 2011.
I hope I’ve managed to shed some light on the complex formulas and rules in place which lead to your property tax bill. If you have any questions about this process, your taxes, or your property valuation, I would love to hear from you. I hope you’ll think of me as not just a real estate broker, but an all-around
real estate consultant. I would love to be your source of information for all things related to real estate. I am always open to your questions, even if you have no intention of buying or selling anything.
Finally, I’d like to briefly consider this month’s real estate statistics. As usual, it’s tough to make heads or tails of the stats this time of year. With only one month to go on, and a seasonally slow month at that, we’re dealing with a pretty small sample size. Overall the stats are flat, but there was a big jump in the number of residential sales. 10 homes sold this January compared to 5 last January.
We continue to get new bank repo listings every week or so. I’m encouraging buyers not to “sit out” the winter, because this is the time of year when a lot of the best deals happen. Sellers are motivated, and you’re less likely to get into a bidding war. Consumer Reports recently stated that January and February are the two best months to buy a home.
Inventory numbers are looking better than they have in quite some time. Homes, condos, and vacant land are all at multi-year lows. The clock is ticking until those numbers rise again in the spring. I’ve been telling all my clients that it’s much better to list in March rather than the more traditional month of May. Why not list now and beat the rush? Maybe you can sneak a sale in before the wave of competition arrives once the flowers come up.
Call me today and we can beat the rush!
GRI, CRS
2011 & 2014 Realtor of the Year
Phone (970) 731-4065
Fax (970) 731-4068
Cell (970) 946-3856
Email: [email protected]
