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I own a condo in a metropolitan downtown area of Colorado, USA. The housing market is very hot, and my property taxes are skyrocketing to the point where I can barely afford them. Part of the problem is that, in my opinion, the city is incorrectly evaluating the market value of my condo based on recent sales of much "nicer" condos in my building.

To combat this, I have been considering getting my condo appraised every two years, at around the time that the "value" of the condo is determined by the city for tax purposes. What I'm trying to find out is: is there a downside that I'm not considering from this approach?


The long form:

I have a bit of an odd situation. I live in a building which was once a 19th-century department store. In the early 1990s, it was converted into condos and apartments. The units in the building are of a wide range of styles and "niceness"; that is, there is a large variety in how "nice" a unit is. However, when the city evaluates my condo's worth for property tax purposes, it appears that they do so without regard to the "niceness" of the units. That is, it compares my condo with the recent sales of any units in the building without regard to how nice the unit is.

For example, the building takes up half of a square city block, so half of the units have a view of the alley between this building and the next (which is not very nice, in my opinion). The units on the top floors used to be a luxury restaurant atop the department store, so they have much nicer basic furnishings -- wood panelling on the walls, wrought iron fixtures, patios, etc.

Some numbers:

  • Unit was bought in February 2013, for less than $400,000
  • Property tax assessment claims it was worth $480,000 as of June 2014; challenged. Revised to $420,000.
  • I refinanced my mortgage in December 2015. Professionally appraised on behalf of the new mortgage company at $480,000 as of December 28.
  • Property tax assessment claims it is worth $660,000 as of June 2016.

The documentation included in the last tax assessment indicated that the value was based on the sale price of other units in my building within the past year -- three units on the upper floors. (eg the "luxury" units with patios, nice furnishings, views of the street, etc.) Other tenants and homeowners in my building have also mentioned to me that they've been having issues with the city valuing all units in the building as if they are identically furnished, so this isn't just in my head. :)

I've challenged this latest valuation based primarily on the assessment done six months prior, and also challenged the validity of the comparison to the "luxury" units. However, upon further reflection, I've also realized that if I hadn't refinanced and hadn't gotten my unit assessed, this challenge would have been much more difficult. Due to this, I've started considering a plan in which I would get my condo assessed every two years, at around the time that the city determines the "value" of my unit for tax purposes. Other than the cost of the assessment itself, I'm trying to determine what other potential issues, side effects, or hidden costs I might run into with this plan.

(Admittedly, the results of my last challenge haven't been determined yet; however if they don't accept my numbers based on the appraisal I will be doing an in-person challenge of the valuation. I also have one of the highest HOA fees in the city on a per-square-foot basis which was included as a footnote in my challenge and is only halfway relevant, I think.)

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    If "other tenants and homeowners [have] been having issues" you might consider a joint approach, possibly with the backing of / help from the HOA. (Not from the US, so unsure how much an HOA is a "management company" trying to extract every last cent from homeowners, or an "owners' collective" defending homeowners' rights). – TripeHound Aug 22 '17 at 6:50
  • a metropolitan downtown area of Colorado - which one? You might be protected by maximum property tax revenue limits, so even if they appraise your property to be worth say 50% more than it was last year, it would still take ~8 years until your tax bill catches up to an amount that properly reflects their appraisal. Where you live is important though, because this rule does not apply to "home-rule" municipalities. – CactusCake Aug 22 '17 at 15:21
  • Denver, to be specific. – Roddy of the Frozen Peas Aug 22 '17 at 15:29
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    Welp... never mind then. Denver was the first home rule municipality in CO. They apparently have some of the most complicated tax rules in the country. Good luck! – CactusCake Aug 22 '17 at 15:42
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    As a way to defray costs of appraisal, should you move forward with this plan, you may want to only have the appraisal completed after the city values your condo. If they value your condo to an amount reasonably close to what you consider 'reasonable' (perhaps through looking for sales of your unit type), no need to suffer the costs of appraisal. If they value too high, you can calculate the impact of their valuation vs the cost of your appraisal, by estimating what your condo is worth, and checking the difference * the tax rate. – Grade 'Eh' Bacon Aug 22 '17 at 18:43
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The main downside as I see it is the costs of appraisal that you mentioned. I would expect that there would need to be a significant amount of error in the government appraisal in order to make a separate appraisal you paid for yourself worth it, though perhaps there is in your case. I can't foresee any "hidden costs", as it just gives you a more accurate valuation of what you own that you can use as evidence in your abatement request.

If this seems to be an issue among the large group of people in the building, it may also be worth organizing a meeting between interested people in your building and the Board of Assessors (that's what it's called here in Massachusetts; I assume there'd be something similar elsewhere) explaining the differences in the different units and trying to come to an understanding as to the best way for them to assess you. It's likely that they just don't have the additional information that you have when they try to determine an appropriate valuation.

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