Property taxes 101: Owners should prepare for big increases on May notice

The Phoenix at Steamboat condo complex, which is near the ski area and has the highly desired amenity of garages or carports, is one of the properties that almost doubled in sales price over the past two-plus years. According to Realtor Colleen de Jong, a four-bedroom, four-bathroom unit at The Phoenix sold for $771,000 in September 2020, and a unit with the same floor plan sold for $1.5 million with multiple offers in April 2022.
Suzie Romig/Steamboat Pilot & Today

The more than 28,000 property taxpayers in Routt County should be prepared for somewhat shocking increases in their 2023 property tax estimates, which will be mailed out May 1 as required by new state legislation.

“It’s going to be a dramatic jump for most properties because that’s what the real estate market did, and nobody is immune to that reality that real estate values have gone through the roof,” said Routt County Assessor Gary Peterson.

The assessor said a robust countywide increase in property tax valuation is typically 15-17%, as opposed to the approximately 50% increase across all property types expected on the May notices.

Peterson, who has served as assessor for 12 years, called the recent increases in Routt County real estate prices “mind boggling.”

The property tax estimates in the May “Notice of Valuation” letters will reflect those real estate price increases, as they are based on biennial re-evaluations and the effective date of June 30.

“This type of increase is unprecedented,” Peterson said. “(Owners) are going to see a significant increase in their assessed value. Because it is such a high escalation in property value, you have to expect the tax bill is going to go up.”

Ulrich Salzgeber, CEO of the Steamboat Springs Board of Realtors, noted that residential real estate values in Routt County have jumped on average approximately 50% in the past two years.

Taxes billed at the end of January are paid in arrears and based on property values before area real estate prices skyrocketed. Determined by an effective appraisal date of June 20, 2020, January tax bills should be roughly the same amount as property taxes billed the previous year, Peterson said.

The assessor’s office has seven staff appraisers who have been busy since September re-evaluating property values in preparation for the May 1 estimates that will be billed officially in January 2024. Peterson said property valuation percentage increases do not correlate exactly to percentage increases in property taxes, however.

The assessor said condo and townhome owners, especially those closer to Steamboat Resort, can expect to see some of the highest tax increases in 2023 due to the greatest increases in sales prices. He noted some condo and townhome prices almost doubled across two years.

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For January’s tax notice, a new state-mandated change further subdivides the separation of non-residential and residential properties. Commercial property tax rates now are divided into lodging, industrial scale renewable energy production, agricultural, oil and gas, and commercial, vacant or industrial. Residential property is now separated into multi-family and all other residential property such as single-family homes.

Salzgeber said many people do not realize that vacant land, even if a lot is zoned for residential, is taxed at the higher commercial rate while it remains vacant.

The Lodge at Steamboat on Village Drive is a property near the ski area where sales prices have almost doubled across two years. Realtor Colleen de Jong said a two-bedroom unit sold for $445,000 in mid-2020, and the same floor plan sold for $849,000 in mid-2022.
Suzie Romig/Steamboat Pilot & Today

Changes in state law will reduce property tax assessment rates slightly to be paid from 2023 through 2025. For example, renewable energy and agricultural properties are dropping from 29% to 26.4% and multi-family homes from 7.15% to 6.8%. But Peterson said those state-level decreases represent “a drop in the bucket” compared to the major increases in real estate values.

Salzgeber said the most common questions the board of Realtors’ office receives about property taxes include how are they calculated and how is the money used.

Residential property values are set by a market approach or comparable sales, often called “comps.” Commercial property values are determined by three measures — comparable sales, cost to build and income generated from the property, Peterson explained.

Property tax revenue stays within the county to support public schools, county and municipal governments, special districts and junior colleges, according to the Colorado Department of Local Affairs.

Property tax rates have many moving parts, including mill levies set by 44 taxing authorities across the county. The final property tax increases for 2023, billed one year from now, will depend on what mill levies the tax authorities set around Dec. 1.

“What has to happen is tax authorities have to ratchet down their mill levies and not take that windfall of revenue that would come from these much higher assessments,” Peterson said. “It’s up to the public to lean on the various taxing authority boards to do just that.”

The total property taxes to be levied by Routt County on this month’s bills for the 2022 tax year represents a less than 3% increase over the previous year. For 2021, the county levied more than $84.9 million in taxes compared to $87.4 million for 2022, Peterson said.

The assessor urged taxpayers to review the handout “Understanding Property Taxes in Colorado” available via the assessor’s office website under the Forms and Information page and then scroll to the link for Colorado Division of Property Taxation Brochures.

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