Chapter 30 - § 30.1 • INTRODUCTION

• Jurisdiction: Colorado

§ 30.1 • INTRODUCTION

§ 30.1.1—Power to Tax

The power of taxation is an essential and inherent attribute of sovereignty. Constitutional provisions relating to taxation do not operate as grants of the power of taxation but instead merely constitute limitations upon that power. The taxing power is exclusively a legislative function, and taxes can be imposed only in pursuance of legislative authority.¹ Thus, a property tax imposed by a city is void if the city has no constitutional or statutory authority to impose a property tax.²

Special districts have the power to levy and collect ad valorem taxes.³ Individual districts may be granted the power to levy taxes.⁴

§ 30.1.2—Taxable Property; Exemptions

The Colorado Constitution⁵ and the laws passed in pursuance thereof⁶ subject all property not exempted by law, real and personal, within the state to taxation.⁷ While the legislature may establish classes of property and provide for suitable and different methods for ascertaining the value for taxation of the different classes,⁸ it may not create exemptions not contained in the Constitution.⁹ Private possessory interests in tax-exempt lands are not among the exemptions categories contained in article X of the Colorado Constitution, except for the exemption for nonproducing unpatented mining claims.¹⁰ Thus, whether possessory interests can be taxed is a question of ownership; if they are privately owned,¹¹ they are subject to ad valorem taxation, if they are owned by the government, they are immune from taxation.¹²

Ownership of real property is ascertained by the assessor from the records of the clerk and recorder, and owners of real property are not required to file schedules listing their property.¹³

Residential real property: The Colorado Constitution defines "residential real property" to include "all residential dwelling units and the land, as defined by law, on which such units are located."¹⁴ C.R.S. § 39-1-102(14.4)(a) defines "residential land" as "a parcel or contiguous parcels of land under common ownership upon which residential improvements are located and that is used as a unit in conjunction with the residential improvements located thereon." The statute requires only that to qualify as residential land, land on contiguous parcels be used in conjunction with a residential dwelling unit, or associated residential improvement, on another commonly owned parcel.¹⁵

§ 30.1.3—Valuation and Assessment

All real property must be appraised and its actual value for property tax purposes determined by the assessor of the county in which the property is located.¹⁶

Biennial appraisal and valuation: Colorado's property tax statutes provide for the biennial appraisal and valuation of real property for tax purposes.¹⁷ The assessor has the duty to determine the actual value of all real property for tax purposes.¹⁸ The methods which the assessor may use in determining actual value are prescribed by statute. Specifically, in odd-numbered years, the assessor determines the actual value of property by appropriate consideration of the cost approach, the market approach, and the income approach to appraisal. The assessor must consider and document all elements of such approaches that are applicable prior to a determination of actual value.¹⁹ The actual value, as found by the assessor, is used to determine a "valuation for assessment" or assessed value, upon which property taxes are based.²⁰ When valuing vacant land, an assessor also must consider several additional factors, including market absorption rate.²¹ To guide the state's assessors in valuing property, the Property Tax Administrator has a statutory duty to prepare and publish manuals based on the three statutorily mandated approaches to appraisal.²² In fulfillment of this duty, the Division of Property Taxation has published the Assessors Reference Library, Volume Three of which concerns land valuation.²³

"Base year" method of valuation: Colorado statutes do not require that the assessor appraise all real property each year to determine the properties' actual values during the tax year for assessment purposes. Instead, the General Assembly has mandated a "base year" method of assigning values to property, under which the value of real property is based on a specified year (the base year). The base year value is then used in calculating the property's assessed value each year until a new base year is fixed and the property is revalued.²⁴

Reassessment cycle: Except as otherwise provided in the case of producing mines²⁵ and oil and gas leaseholds and lands,²⁶ beginning with the property tax year which commenced January 1, 1989, a reassessment cycle was instituted with each cycle consisting of two full calendar years. At the beginning of each cycle, the level of value to be used during the assessment cycle in the determination of actual value of real property in any county as reflected in the abstract of assessment for each year in the assessment cycle advances by two years over what was used in the previous assessment cycle. The level of value is adjusted to the final day of the data gathering period.²⁷

Revaluation for intervening tax year: Generally the actual value determined by the assessor is carried over to the intervening tax year.²⁸ However, an assessor may increase or decrease a property's actual value in an intervening year for certain "unusual conditions."²⁹ When such an unusual condition applies, the assessor is required to revalue the property for the intervening tax year to reflect the increase or decrease in actual value attributed to the unusual condition.³⁰

Contest of assessment: To contest the tax assessed on real property, a taxpayer may either file a protest and adjustment pursuant to C.R.S. § 39-5-122, or initiate an abatement and refund procedure under C.R.S. § 39-10-114.³¹ The protest and adjustment procedure and the abatement and refund procedure are separate and independent mechanisms for determining property tax disputes and are governed by different statutes.³²

Omitted property: C.R.S. § 39-5-125(1) provides, in part:

. . . whenever it is discovered that any taxable property has been omitted from the assessment roll of any year or series of years, the assessor shall immediately determine the value of such omitted property and shall list the same on the assessment roll of the year in which the discovery was made and shall notify the treasurer of any unpaid taxes on such property for prior years.

This provision allows assessors to correct errors and clerical omissions in the assessment roll.³³

Agricultural lands: The actual value of agricultural lands,³⁴ exclusive of building improvements, is determined by consideration of the earning or productive capacity of the lands during a reasonable period of time, capitalized at a rate of thirteen percent. Land that is valued as agricultural and that becomes subject to a perpetual conservation easement will continue to be valued as agricultural notwithstanding its dedication for conservation purposes, except that, if any portion of the land is actually used for nonagricultural commercial or nonagricultural residential purposes, that portion must be valued according to such use.³⁵ If a parcel of land is classified as agricultural land and the perpetual conservation easement is terminated, violated, or substantially modified so that the easement is no longer granted exclusively for conservation purposes, the assessor may reassess the land retroactively for a period of seven years and the additional taxes, if any, that would have been levied on the land during the seven-year period prior to the termination, violation, or modification will become due.³⁶

Residential real property: The actual value of residential real property is determined solely by consideration of market approach to appraisal. A gross rent multiplier may be considered as a unit comparison within the market approach to appraisal.³⁷

Mines and lands or leaseholds producing oil or gas: The valuation for assessment of producing mines and of lands or leaseholds producing oil or gas is determined by 39 C.R.S. articles 6 and 7.³⁸

Other property: The actual value of property other than that mentioned above is the value determined by appropriate consideration of the cost approach, the market approach, and the income approach to appraisal. The assessor must consider and document all elements of the approaches that are applicable prior to a determination of actual value. Despite any orders of the state board of equalization, an assessor may not arbitrarily increase the valuations for assessment of all parcels represented within the abstract of a county or within a class or subclass of parcels on that abstract by a common multiple in response to the order of the board.³⁹ If, having considered the three approaches mentioned above, at the sole discretion of the assessor the use of the three approaches to value does not result in uniform, just, and equalized valuation, then the actual value may be determined by comparison of the surface use of the property with similar surface use.⁴⁰

§ 30.1.4—Taxation of Severed Mineral Interests

Severed mineral interests are subject to taxation⁴¹ and are subject to assessment separate from the surface.⁴² The owner of either the surface estate or the mineral estate may file a schedule with the assessor, listing his or her interest.⁴³ An owner of the surface estate from which a several mineral interest has been severed, on behalf of himself or herself and any other owners of such interest in the surface, may require the assessor to place the severed mineral interest, without regard to value, on the tax roll of the county if the owner of the surface estate provides proof of ownership of the severed mineral interest and a record of the creation of the severed mineral interest as shown by the records of the clerk and recorder. Proof of ownership and the record of creation of the severed mineral interest must be...