Page 26 - January 4-18, 2023 Our Real Estate Group Serving the Commercial Real Estate Community Leasing Real Estate Development Real Estate Acquisition Environmental Private Equity Commercial Lending, Workouts and Foreclosure Real Estate and Commercial Litigation Construction Contracts and Litigation Corporate 1700 Lincoln Street, Suite 4300 | Denver, Colorado 80203 Phone 303-298-1122 | Fax 303-296-9101 Our clients rely on our experienced team of lawyers to guide them through all of their legal needs, from significant business decisions to the most complex global deals and litigation. Our breadth and depth of practice enable us to handle the most complex matters and solve our clients' problems seamlessly. Law & Accounting M ill levies, which are the tax rates used to cal- culate property taxes, are set in Colorado by county asses- sors in late December. The mill levies are set by the taxing authority based on the revenue permitted to be collected for services like schools, fire, and water. Property tax statements are mailed by the assessors in January. You should check the values on your property’s tax bills carefully. If you believe the taxes or valuation for such a property are too high, there may be opportunity to file for tax abatement for a limited period of time to reduce 2022 (and possibly even 2021) prop- erty taxes. n New valuations. County assessors in Colorado revalue properties every two years. Odd years, such as 2023, are the revaluation years. County assessors typically mail Notic- es of Valuation by May 1, 2023, which will show the current valuation of your property and any change in valuation for the year. Some county assessors do not mail Notices of Valu- ation in even years. If you do not receive a Notice of Valua- tion in May, you may want to check your valuation online at the county assessor’s website to determine whether a property tax protest is appropriate. n Consider filing a 2023 protest. You should con- sider filing a 2023 tax protest if you believe the value set by the county assessor is not in line with your expectation of value. You should check the Notice of Valuation carefully and review the square foot- ages, classification and other property information on the assessor’s website to confirm that they are correct. You need to be cautious about filing a tax protest, however, as coun- ty assessors have the right to increase a property’s valua- tion if you protest. It is recom- mended that you consult with an attorney before filing a tax protest. n Base period. For the 2023 tax year, the 18-month base period (sometimes referred to as the data collection period) is Jan. 1, 2021, to June 30, 2022. Assessors use data within this time period, such as compa- rable sales, income and expenses and c o n s t r u c - tion costs, to value your p r o p e r t y . For instance, an asses- sor cannot use a com- parable sale that occurred more recent- ly than June 30, 2022, when valuing a property for the 2023 tax year because the sale is not within the base period. n How property taxes are calculated. The actual value of the property is determined by the assessor using the valuation approaches discussed below. In Colorado, the actual value is multiplied by the assessment rate, which was 29% for com- mercial properties and 7.15% for residential properties in 2022, about one-third of those of commercial properties, to determine the assessed value. The assessed value is then mul- tiplied by the mill levy, which is the tax rate. This determines the amount of property taxes you pay. n Valuation approaches. Assessors may use three estab- lished approaches to valuing commercial properties: the cost approach, the market approach and the income approach. 1. Cost approach. Using the cost approach, the assessor determines the value of a prop- erty based on the anticipated or actual development and construction costs of a prop- erty. This approach is generally used in limited circumstanc- es, such as for new construc- tion. The assessor considers how much it would cost to rebuild or replace the property to determine the value of the property. 2. Market approach. Using the market approach, the asses- sor determines the value of a property by analyzing the sales prices of comparable properties sold during the base period. It is important to consider the characteristics of the property, including size, shape, classifi- cation and zoning, when com- paring properties. Only like properties are typically used in determining the value of your property. If appropriate sales data is not available during the 18-month data collection period, the assessor is permit- ted to go back in six-month increments for up to five years to obtain additional sales data. 3. Income approach. Using the income approach, the assessor calculates estimated operating income, expenses and vacancy rate to deter- mine the property’s net oper- ating income. The assessor then divides the net operating income by the determined cap- italization rate to establish the property’s value. The higher the net operating income and the lower the capitalization rate, the higher the property value will be. This approach typically is used for income- generating properties to deter- mine the financial return an investor would expect for the property. It is possible that an assessor may be using higher rent estimates or lower expense and vacancy rates than actually exist at the property. n Deadline to protest. Even if you do not receive a Notice of Valuation, you can easily find the actual value for your property at the county asses- sor’s website. Most counties offer online, mail, and in-per- son methods for filing protests. The deadline to file a property tax protest for the 2023 tax year is June 1, 2023. s What to expect for property taxes in 2023: Check your bill Carlos Schidlow Shareholder, Greenberg Traurig LLP Neil B. Oberfeld Shareholder, Greenberg Traurig LLP