Owning property in Denver comes with a lot of; beautiful views, growing property values, a booming short-term rental market, and of course, Denver Property Tax. If you own a property anywhere in the United States, then you will need to pay property tax to someone, and Denver is no different. Whether you’re a homeowner, investor, or spring real estate tycoon, understanding how property taxes work in Denver can give you a leg up.
In this guide, we’ll break down the essentials of Denver Property tax, including how it’s calculated, what exemptions and deductions are available, and how taxes impact short-term rental owners. Plus, we’ll show you real-life scenarios and practical strategies to make those tax bills less painful.
Understanding Denver property taxes
First, we should establish that Denver property taxes are only levied on properties located in the city and county of Denver. If your property is located in Aurora or Sterling, you might want to search elsewhere. Property taxes in Denver are determined by two primary factors: the assessed value of your property and the mill levy rate.
What is assessed value?
The assessed value is the starting point for calculating your property tax. It’s important to note that this can be higher or lower than the actual market value of the property. In Denver, this value is determined by the Denver County Assessor’s Office, which periodically reviews property market trends to estimate your property’s market value. For residential properties, Colorado applies an assessment rate of 6.95% to the market value. This means that only 6.95% of your home’s market value is taxable, and below we break down the math.
For example, if your home’s market value is $500,000, your assessed value would be:
$500,000 × 6.95% = $34,750
What is the mill levy rate?
The mill levy rate is the tax rate applied to your assessed value, expressed in mills. One mill equals $1 of tax per $1,000 of assessed value. In Denver, the mill levy is set by various local authorities, such as the City and County of Denver, and Denver Public Schools.
On average, the combined mill levy in Denver is around 72.116 mills. Using the assessed value from our example above:
$34,750 × 0.072116 = $2,507.58 annually in property tax
How to calculate your Denver property tax rate
Let’s walk through the steps using a real-life example:
- Determine your property’s market value.
Let’s say your property is valued at $600,000. - Apply the assessment rate.
Multiply the market value by 6.95% to get the assessed value:
$600,000 × 6.95% = $41,700 - Multiply the assessed value by the mill levy.
Assuming a mill levy of 72.116 mills:
$41,700 × 0.072116 = $3,007.50 annually in property tax
Property tax calculations for various market values in Denver
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How to do a Denver County property search
If you need to search for property tax records or property details in Denver, the City and County of Denver provides several online tools for easy access. Here’s what you need to know:
1. Denver property tax search
- Use the Denver Assessment and Taxation System to find information about property taxes and assessed values.
- You can search by:
- Address: Enter the property address to locate tax and assessment details.
- Account Number: If available, this provides a direct lookup.
- Visit the tool here: Denver Assessment and Taxation System.
2. Denver property records
- For detailed property information, such as ownership history, property characteristics, and legal descriptions, you can access Denver’s property records system.
- Key features:
- Search by Owner Name: Useful for verifying ownership details.
- Search by Parcel Number: To pinpoint specific properties.
- Property records are maintained by the City and County of Denver and can be accessed at the following site: Denver Property Records.
3. Additional payment and tax information
- The property tax system also provides:
- Payment due dates.
- Accepted payment methods (online, mail, or in person).
- Information about tax lien sales.
- Link to more information about payments and deadlines: Denver Property Taxes.
How do Denver property taxes affect short-term rentals?
Short-term rentals have become a great way for property owners in Denver to generate extra income, thanks to the city’s vibrant tourism scene. However, owning a short-term rental isn’t just about furnishing a home and listing it online, property taxes play a significant role in determining profitability.
It’s important to get a grasp of how these taxes can affect your rental income and cash flow.
Tax strategies for short-term rental owners
To stay profitable despite property taxes, here are a few strategies:Dynamic Pricing
Use tools that adjust your nightly rate based on demand, ensuring you’re always charging the optimal price. This strategy helps you maximize your rental income by responding to market fluctuations and occupancy trends in real time.
Expense tracking
Many costs, such as maintenance, utilities, and even property taxes, may be deductible when filing taxes for your rental income. Consult a tax professional for personalized advice. Accurate expense tracking can significantly reduce your taxable income and enhance your overall profitability.
Depreciation with cost segregation
Depreciation with cost segregation involves breaking down your property into various components to accelerate depreciation deductions. Implementing cost segregation can lead to substantial tax savings and improve your property’s cash flow by front-loading depreciation expenses.
Exemptions and deductions available in Denver
Property taxes can be a significant expense, but the good news is that Denver offers various exemptions and deductions to help ease the financial burden. Whether you’re a long-time homeowner or a real estate investor, taking advantage of these opportunities can lower your overall tax bill and improve your bottom line.
Senior and disabled veteran exemptions
Denver offers two key property tax exemptions:
- Senior Homestead Exemption: Available to homeowners aged 65 or older who have lived in their primary residence for at least 10 years. This exemption reduces the taxable value of the property, resulting in lower property taxes.
- Disabled Veteran Exemption: Qualifying veterans can receive an exemption on part of their property’s assessed value.
How to appeal a Denver property tax assessment
If you suspect that your property’s market value has been overestimated, appealing your property tax assessment can potentially lower your tax bill. Over-assessment means you’re paying more in taxes than necessary, which can impact your cash flow, especially for real estate investors and short-term rental owners.
When should you consider an appeal?
There are a few clear signs that might indicate your property has been over-assessed:
- Your property value seems higher than comparable homes: If similar properties in your area have lower assessed values or have recently sold for less than your assessment, it’s worth investigating.
- Recent sales in your neighborhood reflect lower values: A decline in local market conditions that hasn’t been accounted for in your assessment can lead to over-taxation.
- Major property issues aren’t reflected in the valuation: Structural damage, outdated interiors, or other factors that reduce market value should be considered in the assessment.
How to file a property tax appeal in Denver
Filing an appeal in Denver is a straightforward process, but it requires preparation and attention to detail:
| Step | Description |
|---|---|
| Gather evidence | Collect relevant documentation to support your case, such as:
|
| Submit your appeal | File your appeal with the Denver County Assessor’s Office. Appeals can typically be submitted online, by mail, or in person. Make sure to check the annual deadline, as missing it could mean waiting another year to correct the assessment. |
| Await a decision | Once your appeal is submitted, the Assessor’s Office will review your evidence. They may adjust your property’s valuation or reject the appeal. If you disagree with the outcome, you have the option to escalate the case to the County Board of Equalization for further review. |
Denver property tax compared to other Colorado cities
Compared to cities like Boulder and Fort Collins, Denver’s property tax rates are relatively moderate, making it an attractive option for both homeowners and investors. Boulder, known for its affluent neighborhoods and high property values, has one of the highest mill levy rates in the state at 90 mills, which can result in significantly higher annual tax bills. Fort Collins, with a mill levy of 85 mills, also tends to have higher property tax obligations despite its growing appeal to new residents and investors.
Denver’s rate, at 72.116 mills, strikes a balance by offering a more manageable tax burden while still benefiting from rising property values and a thriving real estate market. This combination makes Denver a great choice for those seeking a solid investment and or place to live without the heavier tax costs found in other major Colorado cities. For short-term rental owners, it’s especially appealing, as the lower rate helps maintain profitability in a highly active rental market. Here’s a quick comparison:
Bottom Line: Property taxes need to be paid and Denver is no different.
Keeping up with property taxes is important for everyone who owns property in Denver, whether you’re a homeowner, an investor, or someone renting out short-term. By knowing how taxes are calculated, finding any exemptions you qualify for, and making sure you claim the right deductions, you can keep more money in your pocket, avoid extra costs, and ensure your investment pays off over time.
If you’d rather focus on making money instead of managing the details, think about hiring a rental management company that knows Denver’s market well. With their help, you can increase your earnings, save time, and enjoy having a property that’s taken care of professionally.
FAQ
How often do property taxes in Denver change?
Property taxes in Denver are reassessed every two years as part of the county’s regular valuation process. The assessed value of your property may change based on local market trends, improvements, or new construction. Mill levies can also be adjusted annually by taxing authorities, which may impact your overall tax bill.
What happens if I miss the property tax payment deadline?
Missing a property tax payment in Denver results in penalties, typically starting at 1% of the unpaid balance per month. If the tax remains unpaid for an extended period, the county may initiate a tax lien or foreclosure process. It’s essential to contact the Denver Treasurer’s Office as soon as possible to arrange a payment plan or resolve the issue.
Are there any tax credits for energy-efficient upgrades in Denver?
Yes, homeowners in Denver may qualify for federal or state tax credits for installing energy-efficient upgrades like solar panels, energy-efficient windows, or HVAC systems. These credits reduce your taxable income and help offset the cost of the upgrades. Check with local and federal programs to see what incentives are currently available.
