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Rudy Antle

In my last post I talked about mill levies affecting the real estate taxes assessed on a property. Today I’ll explain why.

Every home, farm, commercial building, and even vacant lot is subject to real estate taxes unless exempt for some reason. Taxes are determined by two factors: the assessed valuation (by the county assessor) of the property and the mill levy.

In Colorado, due to a complicated law that we won’t discuss today, the “assessed valuation” of a residential property right now is 7.96% of the “actual valuation” of that property.

The county assessor determines what the actual value of a property is and then multiplies it times 7.96% and comes up with an assessed valuation. For example, using a home valued at $300,000, the “assessed valuation” of that home is $23,880. This re-valuation of homes is conducted every two years. We’re due for such a re-valuation in Colorado this Spring.

At the end of the year, all the taxing entities that serve a particular property determine their mills levies. State laws determine how much an increase can be. Those taxing entities might be:

· The city in which the property resides
· The county
· The school district (including special bond issues passed)
· RTD (Regional Transportation District)
· Urban Drainage & Flood Control District
· Other special districts serving libraries, fire protection, law enforcement, water & sanitation authorities, etc., depending on whether the property is inside the city limits and which services are provided by that city and therefore included in the city’s mill levy
· In certain cases there might be a “metropolitan taxing district” such as the “Stonegate Metropolitan District, Conservatory Metropolitan District, etc.

These metropolitan taxing districts can make a big difference in the tax rate. In researching for my clients mentioned in the last post I came across 7 different subdivisions with these metro taxing district mill levies:

1. 52.059
2. 50.500
3. 45.000
4. 42.827
5. 31.645
6. 27.412
7. 00.000 (this one did not have a “metro taxing district”

You can readily see that in comparing homes it will make a huge difference whether the ones you prefer are in a metropolitan taxing district and what its total mill levy is.

More about these metropolitan taxing districts next time.

Last week I showed a client about 40 homes. They narrowed their choices to two homes about a mile apart.  Both were the same price, but one would cost them about $46 per month more.  How could that be?

Both homes had a mailing address of Aurora, Colorado.  They even had the same zip code.  However, one was within the city limits of Aurora, and the other was in unincorporated Arapahoe County.  Because the one outside the city limits is a new home, the taxes for that home had not yet been set.  So to help my clients know what their payment would likely be, I calculated the estimated taxes for them.

The key to this calculation was the tax rate. What percent of the value of the house would the tax assessor use to determine their tax bill?  To keep it simple here, let's just say that the difference came down to the total mill levy that would apply to each home.

The home in the city limits had a mill levy of 130.255 mills (or 13.255% of the assessed valuation of the property).  The other had a mill levy of 155.786 mills (or 15.5786% of the assessed valuation).  The difference of 25.53 mills meant a difference of about $46 a month in taxes for two homes of the same price.

If my clients had selected a home inside Aurora in a different subdivision only about a mile farther away, their taxes could have been as much as $164 a month less than the one outside the city limits.  One such subdivision has a mill levy of 73.303 mills as compared to the 155.786 mills of the home outside of Aurora.

In my next post I'll explain more about why this is so.  The important thing to know here is that you can't assume that taxes will be the same just because two homes in different areas are selling for the same price.  Ask your Realtor® about the different tax rates for the two properties.