Real Estate

Colorado Property Tax – Understanding Proposition HH

Colorado statewide property tax bills brought some unwelcome surprises to mailboxes in May 2023, with some property owners seeing tax increases as high as 65 percent in response to a recent spike in home values. This resulted in a record number of appeals flooding assessor’s offices throughout the state, prompting a new proposal (Proposition HH) before the state legislature to lower tax rates for residential, commercial and other properties over the next 10 years.

Proposition HH, otherwise known as Property Tax Changes and Revenue Change Measures, offers a bit of a complex proposal for voters to decide on. In essence, it would cap residential property tax rates at 6.7 percent and reduce the taxable value of homes by $50,000 in 2023 and $40,000 in 2024 for 10 years. Thus, property taxes would continue to increase over time, but at a much slower rate based on property value.

But this reduction comes with a trade-off for Coloradans. Lowering property tax bills also decreases funding for government services and schools. To make up for that shortfall, the state would reduce the amount of money refunded to taxpayers through the Taxpayer’s Bill of Rights Amendment (TABOR), approved by voters in 1992 to limit the amount of revenue governments in the state can retain and spend.

On November 7, 2023, Colorado voters will decide whether Proposition HH goes forward. If the proposition becomes law, here are the biggest changes that would occur:

Reduce residential property tax assessment rates and a set decrease from a property’s taxable value before applying the new assessment rate
Extend reductions for the next 10 years (through 2033)
Allocate funds to local governments to make up for decreased property tax revenues
Create a limit on local government property tax revenue
Create a new cap on state revenue (Proposition HH Cap) allowing the state to retain revenue up to the newly created cap, reducing the refund to residents under TABOR
Create a distinction between owner-occupied homes and non-primary residences (with decreased savings for the latter)

Assuming the economy continues to grow, Proposition HH would allow the state to keep $2.2 billion in revenues per year by the end of the 10-year period. Any excess money that wasn’t needed to replace property taxes would be directed to the State Education Fund.

If Proposition HH fails to pass, the current property tax law under SB22-238 would remain in effect.

The attorneys at Hackstaff, Snow, Atkinson & Griess are experienced in complex tax and real estate matters, and can help you navigate the intricacies of commercial and residential tax laws.