How are property values calculated? What to expect: 2009 property valuations 4/24/2009 1
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MV x AR=AV x Mill = Tax Market Value x Assessment Rate=Assessed Value x Mill Levy = Taxes Market Value: - This is the only component of taxes established by the Assessor. (Assessor = Valuation) (Assessor NOT = Taxes) Per Colorado Revised Statutes, the Appraisal Date is: June 30, 2008 (Same for all 64 Colorado Counties) 4/24/2009 3
2.) Must use sales that occurred between: 01/01/2007-06/30/2008 3.) Prior year valuations, 2007 & 2008 tax years- had an appraisal date of 06/30/2006. Result: the new change in value is over a Two-year period. 4/24/2009 4
Assessment Rate: 1.) 29% for most properties, except improved residential property which is currently at 7.96% of market value. Market Value Assessment Rate Assessed Value $ 200,000 x 29% = $ 58,000 $ 200,000 x 7.96% = $ 15,920 2.) Vast difference between the rates is due to the Gallagher Amendment, passed by Colorado voters in 1982. 3.) Result: proportionately higher tax burden on Commercial and Vacant Land. Assessed Value: 1.) The numeric result of the market value, multiplied by the appropriate assessment rate. 2.)The assessed value is multiplied by the total mill levy to calculate the tax amount. 4/24/2009 5
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Mill Levy: 1.) Each taxing entity (School Districts, County, Fire, Library, Recreation, establish their mill levy, annually. 2.) The summation of these individual mill levies is calculated for every property in the County based on it s geographic location within the boundaries of the various entities. 3.) This total mill levy, is multiplied by the assessed value to calculate the taxes. 4/24/2009 7
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Actual Value Assessment Rate Assessed Value Mill Levy Taxes $200,000 X 7.96% = $15,920 X.062619 = $ 996.89 Mill Levy Calculation & Tax Dollar Distribution: Taxing Entities (Tax Area 001000) mill levy assessed value taxes RE1-J Montrose School District.024239 X $15,920 = $ 385.88 Montrose County.021145 X $15,920 = $ 336.63 Montrose Rural Fire District.008845 X $15,920 = $ 140.81 Montrose Library District.003000 X $15,920 = $ 47.76 Montrose Recreation District.003399 X $15,920 = $ 54.11 Colorado River Water District.000221 X $15,920 = $ 3.52 Tri-County Water District.001770 X $15,920 = $ 28.18 Total Mill Levy.062619 Total Tax $ 996.89 Actual Value: Established by the Assessor every two years based on market sales. (For 2009 & 2010 tax years we are using a 6/30/2008 level of value, based on sales that occurred between January 1, 2007 and June 30, 2008.) Assessed Value: Actual value multiplied by the assessment rate. (Assessment Rate is currently 7.96% for residential property and 29% for all other property types. These rates are a byproduct of the Gallagher amendment passed in 1982. All 64 Colorado counties use these same assessment rates.) Mill Levy: It is a summation of the revenue needed by the different taxing entities to operate. (In the example above, it says that a person pays $62.62 for each $1,000 of assessed value.) 4/24/2009 9
Things to consider: A.) Statutorily, we can NOT use any sales data or consider market conditions beyond the June 30, 2008 appraisal date. B.) Our valuations are established based on actual market transactions (sale prices), a decline in the volume of transactions in not a factor in establishing values. C.) The change in value reflected on the 2009 Notices will be from June 2006 to June 2008. Between this period the overall real estate market was still relatively strong. 4/24/2009 10
How much will property values increase? Actual Average PRELIMINARY Average Property Type Change (2007) Change (2009) Residential 25%-30% 0%-15% Commercial 18%-27% 10%-20% Vacant Land 25%-35% 0%-15% 4/24/2009 11
What about more current market conditions? In Montrose County we have seen a noticeable decrease in sales volume with stable sale prices. Nine (9) regional Counties: Montrose, Delta, Eagle, Gunnison, Mesa, Ouray, Rio Blanco, Routt and San Miguel all combined residential sales data to develop a two-year trend for western Colorado. (January 1, 2007 through January 1, 2009) What the data indicated was: after the June 2008 appraisal date, the VOLUME of sales transactions steadily DECREASED. However, the Median SALES PRICE of homes did NOT DECREASE. 4/24/2009 12
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1.)Due to the recent downward trend in national real estate conditions; there is a false perception that valuations in Montrose County will be decreasing in 2009. 2.) Most properties in Montrose County will see an increase in value. However, compared to previous re-assessment cycles, the increases on average will be modest. 4/24/2009 14
3.) How does this translate to an increase in taxes? It depends on the taxing entities that collect property tax revenue. We will provide them with their new assessed values and they will decide to increase, not adjust, or decrease their revenue when setting their 2009 mill levies. 4/24/2009 15
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