Every two years, every Colorado county reassesses property taxes for real and personal property. The notices of valuation for the 2025-2026 cycle will soon be released on May 1. Now is the time for commercial property owners to prepare to review their assessment notices and decide whether it makes business sense to appeal those determinations. This is especially true given that many counties have in recent years become more aggressive in valuing commercial property as budgets have gotten tighter and counties see the prospect of increasing and collecting property taxes as an untapped revenue source.
Commercial property is valued based on consideration of three different approaches—the market approach, the cost approach and the income approach—to arrive at the “actual value” of the property. The market approach, which is also termed the sales comparison approach, requires analyzing the sale prices of recently sold comparable properties in the area, adjusting for size, location, amenities and other factors. The cost approach estimates a property’s value by assessing the cost of replacing or replicating the property, and often considers the costs of construction, land value and appreciation. For the income approach, which is used for income-generating properties such as commercial buildings, estimates are valued by capitalizing a property’s annual net operating income based on a capitalization rate that reflects market considerations and risk. County assessors must consider each approach and weigh them based on what they believe most accurately captures a property’s value. For example, commercial properties are usually assessed primarily based on the income and sales comparison approaches. The assessed value is then multiplied by the commercial assessment rate, which is 27% for 2025, to arrive at the property’s assessed value. The assessed value is subsequently multiplied by the tax rates of relevant taxing authorities to reach the amount of property taxes owed.
Although notices of valuation will be sent on May 1, county assessors are required by law to limit consideration of information, such as a property’s financials, to the relevant “base period.” For the 2025 tax year, the relevant base period is Jan. 1, 2023, to June 30, 2024. While some information before the base period could be legally relevant if there is insufficient data available from the base period, data and information after June 30, 2024, including market conditions, cannot be considered in assessing the property’s value. This means that more recent economic events, such as the effect of the Trump administration’s tariffs, are irrelevant and not a basis for appealing an assessment.
Appealing a notice of valuation involves a multistep administrative process. Commercial property owners typically must postmark protests of the notices of valuation on or before June 8. However, because June 8 falls on a Sunday, the deadline this year is June 9. If a protest is filed, the county assessor must make a decision and mail a Notice of Determination by the last regular working day in June, unless the county elects to extend the mailing date to Aug. 15.
The process does not necessarily end there. Property owners dissatisfied with the Notice of Determination may appeal to the county board of equalization by July 15. The county then conducts hearings through Aug. 5, unless the county opts to extend the deadline to appeal to Sept. 15, which in that case, the county conducts hearings through Nov. 1. The county board must provide notification in writing within five business days of the date of its decision. To expedite the process, some commercial property owners seek and receive administrative denials and have tax agents guide them throughout the process.
Finally, property owners still dissatisfied with the county board’s decision may appeal to either the Board of Assessment Appeals or the appropriate Colorado district court within 30 days of the date the decision was made. These appeals involve a discovery process (exchange of documents and information) and a trial or hearing. Owners usually hire both lawyers and appraisers to assist at this stage. Indeed, these trials and hearings often turn into a “battle of the experts,” where both the owner’s lawyers and the county’s lawyers elicit testimony and cross-examine expert appraisers.
Commercial property owners may decide to sue for a number of reasons. If a commercial owner is wondering whether to appeal, the following may help inform that decision:
- Large spikes in assessed property values;
- Inclusion of revenue from service contracts;
- Inclusion of revenue derived from property that is separate from the property being assessed;
- Artificially high capitalization rate used;
- Failure to consider relevant sales of comparable properties during the base period; and
- Inadequate consideration of relevant market conditions, such as lingering effects from COVID-19, during the base period.
Please reach out to Justin Cohen or David Meschke if you have questions concerning your commercial property’s valuation.
This document is intended to provide you with general information regarding property tax assessments in Colorado. The contents of this document are not intended to provide specific legal advice. If you have any questions about the contents of this document or if you need legal advice as to an issue, please contact the attorneys listed or your regular Brownstein Hyatt Farber Schreck, LLP attorney. This communication may be considered advertising in some jurisdictions. The information in this article is accurate as of the publication date. Because the law in this area is changing rapidly, and insights are not automatically updated, continued accuracy cannot be guaranteed.