Colorado was ranked No. 5 for homeowners by SmartAsset, thanks to the state’s low residential property taxes.
Colorado was ranked Colorado as the fifth best state in the nation to own a home, thanks to low property taxes.
The analysis by SmartAsset said that Colorado “lies at the other end of the spectrum,” from New Jersey, which has the highest property taxes in the U.S.
In Colorado, the average effective property tax rate is 0.63 percent, compared with 2.2 percent in New Jersey.
The owner of a $200,000 home in New Jersey would pay an average of $4,400 annually, according to SmartAsset.
“If that same homeowner owned a $200,000 house in (Colorado), she could expect annual taxes to be closer to $1,260,” according to SmartAsset, a technology company based in New York, which crunches data on a variety of topics.
Colorado property taxes are the ninth lowest in the nation, according to SmartAsset.
One of the main reasons that Colorado property taxes are so low is because in 1982 voters approved the Gallagher Amendment.
The Gallagher Amendment requires that 45 percent of all property taxes collected must come from residential properties and 55 percent from commercial properties.
In addition, the Gallagher Amendment mandates that the assessment rate for commercial property be fixed at 29 percent, while the residential rate is adjusted each year to keep the 45/55 split constant.
The Gallagher Amendment is a double-edge sword, according to Tom Clark, CEO of the Metro Denver Economic Development Corp.
“This is always the rub for us,” said Clark, who also is the Executive Vice President of the Denver Metro Chamber of Commerce.
Low property taxes are a double-edged sword for Colorado, according to Tom Clark.
“The low residential property tax allows our citizens to keep and accumulate more wealth through the time-honored path that most Americans use to build an estate and secure their retirement – home ownership.”
“The bad news is that the overall property tax burden that is not borne by homeowners is now carried by commercial properties,” Clark continued.
In other words, the Gallagher Amendment creates a “distortion” to market forces, he said.
However, there is an “upside” to the Gallagher Amendment beyond keeping property taxes relatively low for homeowners, Clark said.
“When we are recruiting employees from relocating companies, encouraging them to move to metro Denver, the prices of houses can be sticker shock,” Clark said.
“However, we typically can sway them due to our low property taxes,” Clark said.
He said the recent deal inked with Panasonic near the Denver International Airport is a good example of lower taxes offsetting higher home prices.
SmartAsset ranked Wyoming, the two Dakotas and Minnesota ahead of Colorado for homeownership.