This is one of those times that you could say that government really did cause your property taxes to go up. At least in respects to your vacant land in Pueblo West.
According to the Pueblo County Assessor, there were roughly 1300 properties in Pueblo West that were identified an about 1,000 properties were given the new reassessment value causing the property tax on those properties to go up by a factor of four.
In Colorado, our current residential property tax is 7.15% of the assessed value of the residential value of your home times the current mill levy. (See how property taxes are calculated here). This in the past was also the rate of tax for the parcel next to your home that you purchased to keep neighbors away. In Pueblo West, in the majority of areas our parcels of land are at one acre or more, typically in the one to one and a half acre range with some parcels around 5 acres and even a smaller number of larger parcels.
On April 21, 2021 Senate House Bill 21-1061 was passed and homeowners in Pueblo West are just now receiving notices that their property tax on the land next to their home is going up.
The summary of the bill concerning the definition of residential land for the purpose of property tax classification was changed.
The act modifies the definition of the term “residential land” for the purpose of property tax classification. Currently, a parcel of land without a residential improvement is classified as residential land if it is contiguous with a parcel of land under common ownership upon which a residential improvement is located and if it is used as a unit in conjunction with the residential improvements located thereon. The act modifies classification for this type of parcel by:
- Requiring the parcel to have the identical owner as the adjacent parcel based on the record title;
- Requiring the parcel to have a related improvement that is essential to the use of a residential improvement located on the identically owned contiguous residential land; and
- Specifying that contiguity in this instance is not interrupted by an intervening local service street, alley, or common element in a common-interest community.
The act also removes from the definition parcels of land in a residential subdivision, the exclusive use of which land is established by the ownership of such residential improvements.
So in laymans terms this is what it means and the best way to explain it is to give you an example.
You purchased a home here in Pueblo West on a little over an acre. You looked around and said wouldn’t it be nice to own the land to the right of me so no one could ever build a home on it and ruin our view of the mountains. You stalked the owner of the property next to you, made an offer, they accepted and now you own the property next to your home. Since these are two separate parcels of land each year you receive a tax notice for both of them, one for the home you own with the improvements on it, (the home itself) and the parcel next to your home. In the past you paid the 7.15% of the assessed value of your home and 7.15% of the assessed value of the property next to your home (the vacant land without any improvements). Now, since this bill passed you are being taxed on the land next to your home at a rate of 29%, a four fold increase in the taxes that are owed. This 29% is the rate at which land ( a non-residential assessment) is set at.
So in essence the land you own next to your home is considered vacant land with no improvements on it (no fencing, shops or other types of improvements).
This 29% assessment rate is the tax on 9 other property classifications; vacant land, commercial, industrial, agricultural, natural resources, producing mines, oil and gas, stated assessed and exempt lands.
So the catch-22 here is that if you ever went to the committee or architecture and tried to get a permit to fence in your entire property, ie, a fence around the homes parcel and then to include the additional parcel that you owned next to it, you would be denied. Or if you tried to build a big shop on that property next to your home you would more than likely be denied.
There is a work around and many homeowners that have tried the previous steps have found that you can do what is called a “Lot Line Vacation.” By vacating or essentially merging the two properties together as to making the property one parcel, you would then be paying the residential rate of 7.15% of the property’s value and not the 29% for vacant land.
Here is how to do that.
Take a look at this link at the Pueblo County Planning and Development FAQ page. https://county.pueblo.org/planning-and-development-department/planning-and-development-faq
Specifically the question “I own two lots. Can I vacate my interior lot line?
Answer:
Interior lot lines within a recorded plat may be vacated subject to approval of the County Zoning Administrator under the following guidelines:
a. Involves five (5) lots or less;
b. Interior lot lines only, no exterior boundary lines of a subdivision;
c. Lots within a recorded subdivision; the year of recordation is not a factor;
d. No easements or right-of-way will be vacated, nor publicly owned land will be adversely affected.
e. Submittal requirements. An application with a checklist of requirements for a Lot Line Vacation can be found online under download applications and forms.
A lot line vacation plat must be prepared by a Professional Land Surveyor registered in the State of Colorado. The property does not need to be surveyed, the plat is prepared using information shown on the recorded plat. Department staff reserves ten (10) working days to review a complete application. Revisions to be made, if any, are returned to the surveyor who prepared the plat. After revisions are made, the surveyor returns a signed, sealed, notarized mylar plat to staff for recordation. There is an application fee; the current Land Use Application Fee Schedule can be found online under the web page for the Department of Planning and Development.
Please Note: This process is not reversible. Lot Lines may only be reestablished through the subdivision process.
I recently talked with Cardinal Points Survey about the costs of lot line vacation plat and was quoted roughly $2,000. I would verify that is the costs and call around for other survey companies in the area to compare costs, plans and timelines.
A copy of the signed ACT can be found here.
