Chapter 6 - § 6.12 • PROPERTY TAXES

• Jurisdiction: Colorado

§ 6.12 • PROPERTY TAXES

A statute on property taxation provides that common property or common elements within a common interest community as defined in the CCIOA must be appraised and valued pursuant to the CCIOA.⁴³² That statute separately addresses each of the three types of common interest communities. It says that in a cooperative, unless the declaration provides that a unit owner's interest in a unit and its allocated interests is personal property, that interest is real estate for all purposes.⁴³³ It also states that in a planned community without common elements, the real estate comprising that community may be taxed and assessed in any manner provided by law.⁴³⁴

Most common interest communities are either condominiums or planned communities with common elements. In those projects, each unit that has been created, together with its interest in the common elements, constitutes for all purposes a separate parcel of real estate and must be separately assessed and taxed. The valuation of the common elements must be assessed proportionately to each unit — in the case of a condominium in accordance with the unit's allocated interests in the common elements, and in the case of a planned community in accordance with the unit's allocated common expense liability, set forth in the declaration. The common elements may not be separately taxed or assessed.⁴³⁵

When a project is a common interest community under the CCIOA, residential common elements may not be assessed separately from the living units even if those residential common elements are not exclusively used by members of the community. However, where there is nonresidential use of common elements, the land and improvements associated with that nonresidential use must be valued separately and a different tax rate applied.⁴³⁶ The Division of Property Taxation recommends that each individual unit's allocation of the value of nonresidential common elements be separately stated on each notice of valuation (NOV) and tax bill to help the taxpayer better understand how the tax liability is developed.

The valuation issue arose in Manor Vail Condominium Ass'n v. Board of Equalization⁴³⁷ where the value of commercial improvements — a restaurant and meeting rooms — in a condominium complex with over 100 residential units was assessed at the nonresidential ratio of 29 percent instead of a then-applicable lesser residential ratio of 10.36 percent. The association claimed the assessment violated the CCIOA. It...