On June 2, 2021, Colorado state lawmakers introduced a last-minute bill (SB21-293) to sidestep a potential ballot issue known as Initiative 27. If enough signatures were gathered to put Initiative 27 on the ballot, the assessment ratios for all residential properties would have permanently dropped to 6.5%, and all commercial properties would have dropped to 26.4%.
On Wednesday, June 9, 2021, the Colorado Legislature passed SB21-293, which includes a two-year tax cut on residential properties as well as agricultural land and properties used for renewable energy. These reductions total approximately $200 million in tax breaks a year, with provisions that cancel out many of the provisions in Initiative 27. Some members expressed concern over how the cuts may affect rural area services as well as the ability for the bill to assist those struggling with rent. Ultimately, legislators agreed the bill allows them time to properly revaluate assessments and assist those businesses and residents in recovering from the pandemic.
The bill will result in the creation of multiple subcategories of residential property and commercial properties. The assessment ratio for multifamily properties would be reduced to 6.8% from the current 7.15% rate, while all other residential property would be reduced to 6.95%. In terms of commercial properties, the subcategories are broken into agriculture and renewable energy property. All commercial ratios would stay at 29%, except for agricultural and renewable energy property, which would drop to 26.4%.
In addition, primary homeowners will have the opportunity to defer the payment of a portion of the real property taxes that exceed the tax-growth cap. The total amount of deferral allowed is $10,000. For purposes of the equity the person must have in the homestead to qualify for the benefit, the taxpayer is treated like a person called into military service. The equity requirements would be the same as required to qualify for deferral and surviving spouse eligibility. This benefit currently exists for veterans and the elderly but now would extend to all primary homeowners. This would not apply to owners of second or vacation homes.
The local experts at Ryan are available to provide an overview of the legislative session and an in-depth analysis of the newly enacted changes impacting businesses in the state.
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