Property valuation and taxation for business and industry

Classification

Property is classified as real or personal property. The county Assessor's duty is to value property for property tax purposes. The primary responsibility is to determine an equitable value for your property so you pay only your fair share of the taxes.

Level of value

Real property is reappraised by the Assessor's Office every odd numbered year. The value determined by the Assessor for the year of reappraisal is generally used for the intervening year also. The actual value of real property is base on its value as of the appraisal date, which is June 30th of the year prior to the reappraisal year.

The actual value of personal property is based on its current value adjusted to the level of value used for real property.

The actual value of producing mines, producing coal mines, other lands producing nonmetallic minerals, oil and gas, and agricultural lands is based on production or income information and is not adjusted to the level of value used for real property. Their actual value is an exception to the "Level of Value" procedure.

Approaches to appraisal

The Assessor determines the actual value of property by considering three methods of appraisal: the market approach, the cost approach, and the income approach.

Market approach

Consists of comparing fair market sales of comparable property.

Real property

Arms length market sales of similar properties are analyzed, compared, and adjusted to arrive at a value for the subject property. These sales must have occurred during the 24-month period prior to and including the appraisal date of June 30. If a sufficient number of sales are not available during this 24-month period, the Assessor may go back a maximum of five years to collect the required number of sales needed to set values.

Business personal property

Estimate of the current selling price of the owner's furniture and equipment. The selling price is then rolled back to the appropriate level of value used for real property.

Cost approach

Estimates the material and labor costs to replace the subject property with a similar property.

Real property

Estimates the replacement cost of improvements and fixtures as of the appropriate level of value.

Business personal property

Estimates the current replacement cost and the total accrued depreciation of the item. The estimate of value is then rolled back to the appropriate level of value used for real property.

Income approach

Converts net income from rent to a potential worth.

Real property

Determines the net income of the business property from rents by deducting operating expenses from the gross income. The net income is capitalized into an indication of value.

Business personal property

Applies to leased or rented equipment when net income can be converted into an estimate of value. The value is then factored back to the appropriate level of value used for real property.

Exceptions to the three approaches

Residential real property

The Assessor determines the actual value of residential property by using only the market approach to value.

Agricultural land

The Assessor determines the actual value of agricultural land, exclusive of buildings or improvements, by considering the earning or productive capacity of the land over a reasonable time, capitalized at a rate of 13%.

Natural resource properties

Oil and gas leasehold and lands

The valuation for assessment for producing oil and gas leaseholds and lands is 87 1/2% of the selling price of oil and gas sold or transported from the premises from primary recovery during the preceding calendar year; or 75% of the selling price of oil or gas sold or transported during the preceding calendar year from secondary recovery, tertiary recovery, or recycling project facility.

Producing mines

All mines whose gross proceeds during the preceding calendar year have exceeded $5,000 are classified as producing mines. Producing mines are valued by the Assessor at 25% of the gross proceeds or 100% of the net proceeds whichever amount is greater.

Equipment and improvements or buildings of natural resource properties are valued separately by using the three approaches to value.

Assessment date

Colorado law states that January 1 is the assessment date. The Assessor determines the current use and condition of the property as of January 1 each year.

Assessed value

The Assessor multiplies the actual value by the assessment rate of 29% (except residential property, oil and gas lands, and producing mines) to arrive at an assessed value. The assessed value is multiplied by a tax rate to calculate the taxes for the property.

Example: retail store

The Assessor determines the following property values at the appropriate level of value:

Real property

Land $40,000

Building $160,000

Total Actual Value $200,000

Business personal property

Equipment $23,000

Furniture $17,000

Total Actual Value $40,000

The taxpayer would receive two Notices of Valuation: a real property notice and a personal property notice.
Actual Value x 29% = Assessed Value

Real Property: $200,000 x 29% = $58,232

Personal Property: $40,000 x 29% = $11,600

Assessed Value x Tax Rate = Tax Bill

Retail store's tax bill

Tax Rate: 0.12 (average Boulder County tax rate/mill levy)

Real Property: $58,232 x .074 mills = $4,309.18 Tax Bill

Personal Property: $11,600 x .074 mills = $858.40 Tax Bill

Personal property is not taxable until the assessment date following the year in which the property is acquired and first put into use. Personal property value is not prorated. The valuation and taxable status as of January 1 remains for the entire year even if the property is destroyed, conveyed, enters or leaves the state, or changes taxable status after the assessment date. When any of these changes occur, taxpayers need to modify their asset listing when filing their declaration schedule the following year.

$4,000 Exemption for business personal property

Effective 1/1/2009, the total actual value (market value) in the county is $4,000 or less to be exempt.

If an owner's personal property filed in the county exceeds a total actual value of $4,000, all the property is taxable including the initial $4,000.

Also, in the event additional assets are put into use which increases the total actual value of the personal property to an amount greater than $4,000 the owner must again file a declaration schedule.

Business location is defined as the actual physical location of your property as of January 1. When more than one item of personal property is located in the county, consideration of the $4,000 exemption must be based on the total actual value of all the items. To avoid a possible misunderstanding regarding whether a declaration schedule must be filed, new businesses, first time filers, and taxpayers who are unsure as to the actual value of their personal property are urged to contact the Assessor and provide an itemized listing of their personal property.

All real property is valued based upon its status as of January 1, the assessment date. However, real property can be prorated under the following conditions:

The owner must show the following information with his personal property schedule:
• Kind, description, and serial number of equipment.
• The counties in which the equipment will be located.
• Estimated time in each county.

Portable or movable equipment includes drilling rigs.

The Assessor will determine a value that is apportioned to each county.

NOTE: Some equipment is classified as type "F" or special mobile equipment and is valued and taxed by the local county clerk. But, this property should be declared as such on the Personal Property Declaration Schedule filed by the owner.

Starting a business

If you are starting a business in Colorado, request a
Colorado business start-up kit from:
Colorado Business Assistance Center
2745 Welton Street
Denver, CO 80202


Telephone:

(303) 592-5920 (800) 333-7798

Operating a business

If you are operating a business in Colorado, request
Business development materials from:
Office of Economic Development and International Trade
1625 Broadway, Suite 1710
Denver, CO 80202
Telephone: (303) 892-3840

What is required by law?

Owners of certain personal and real property must declare the taxable property they own to the Assessor. The information is declared on a property declaration schedule.

Who must file?

Owners of taxable personal property such as: furniture, equipment , certain fixtures, and household goods and furnishing productive of income (i.e. drapes, free-standing appliances, etc.) in a rental property.

Owners of producing natural resource properties:

• Oil and gas
• Producing mines
• Coal mines and other lands producing nonmetallic minerals

When to file?

The Assessor mails declaration schedules after January 1, and taxpayers must return them to the Assessor by April 15. If the owner does not receive a declaration schedule in the mail, one may be picked up from the Assessor's Office. Or download the Personal Property Declaration Schedule from this web site.

Deadline for filing declaration schedules is April 15

Extension for filing personal property declaration schedules

An extension may be obtained from the Assessor's Office by submitting a letter of request and payment of $20 for 10 days or $40 for 20 days. The extension request must be received by the April 15 filing deadline. One extension covers all schedules.

Failure to file property declaration schedule

LATE FILING PENALTY ATTACHED - Any owner of personal property who fails to file a declaration schedule by April 15 or by the end of the extension time requested, will be fined $50 or 15% of the taxes due, whichever is the lesser amount.

The Assessor will determine the property value according to the best information available.

Confidential Documents

All Personal Property Declaration Schedules and enclosed forms returned to the Assessor are considered private, confidential documents by law.

What is required by Law?

Within ten days of the execution of a mineral lease, the lessor must file an affidavit with the Assessor. The affidavit contains the annual net rental and is considered a confidential document.

Assessor's Responsibility

Each year, you will receive a Notice of Valuation for each class of property you own. This notice will indicate the actual value of your property and advise you of your right to appeal the value listed.

Taxpayer's Responsibility

When you receive a Notice of Valuation, study it carefully. The notice describes the property you own, gives the actual value for both the prior and current year, advises you of the amount of change, and provides an opportunity to present your appeals to the Assessor.

Keep in mind that the changed value on the notice affects the amount of taxes you pay the following January. If the Notice of Valuation reflects a value you disagree with or if you have any questions about the valuation, call your County Assessor.

If you disagree with the change in value

You must file an appeal with the Assessor in the county where the property is located

Real Property owners: All appeals must be postmarked or received by June 1.

Personal Property owners: All appeals must be postmarked or received by June 30.

The Assessor must give a decision, in writing

To Real Property Owners and Personal Property Owners by the last regular working day in August.

If you are dissatisfied with the Assessor's decision

You can appeal to the County Board of Equalization (county commissioners) by September 15 for real property and for personal property. The County Board of Equalization conducts hearings through November 1. The board must notify you in writing within five business days after their decision is made.

If you are dissatisfied with the County Board of Equalization's decision

You may appeal to the Board of Assessment Appeals, to the county commissioners for binding arbitration, or the district court of the county in which the property is located. You must appeal within 30 days of the County Board of Equalization's decision.

If you are dissatisfied with the decision of the Board of Assessment Appeals or District Court

You can appeal to the Court of Appeals within 30 days of the Board of Assessment Appeals decision or 45 days of a district court decision. Decisions reached through the arbitration procedure are final and not subject to review.

The county treasurer is responsible for mailing and collecting the property tax bill. Each year taxpayers receive their property tax bills after January 1. If the tax amount is $10 or less, the county treasurer may add an administrative fee of $5 to your bill. If the tax amount is greater than $25, you can pay the taxes in two equal payments.

The first half payment is due in the treasurer's Office by February 28.

The second half payment is due by June 15.

If you pay your taxes in a lump sum, the payment is due by the last day of April.

If your payment is late, a penalty interest is added to the tax amount.

Assessment terminology

State of Colorado Department of Property Taxation