Chapter 10 - Exemptions

General

All property, both real and personal, is subject to property taxation unless specifically exempted by law, as specified in article X of the Colorado Constitution and § 39-1-102(16), C.R.S. This is the first rule to bear in mind when considering the exemption of property. Some exemptions are determined by ownership while other exemptions are dependent upon one or more specific conditions being met. The courts have held that “the firmly established rule is that the presumption is against tax exemption, and the burden is on the one claiming the exemption to establish clearly his right thereto,” United Presbyterian Association et al. v. Jefferson County Board of Commissioners, 167 Colo. 485, 448 P.2d 967 (1968). Before granting any exemption, all applicable statutes must be reviewed to determine that the owner and the property meet all criteria specified. Refer to Addendum 10-A, Statutory Exemptions, for a complete list of categories of exempt property and the corresponding statutory citations.

Owners of property which may qualify for exemption as owned and used for religious purposes, a private school, or strictly charitable purposes must file an application with the Property Tax Administrator. All other exemptions listed are the responsibility of the assessor.

The statutes listed here apply primarily to the exemption of various types of properties and owners. Definitions and applicable criteria may be contained in related citations.

Exemptions Determined by the County Assessor

Public Property

Federal

United States Government Property

Property owned by the United States government is exempt from taxation, as stipulated in section 4 of the Enabling Act. While ownership is normally the only requirement for exemption of such property, some exceptions are listed in this section under Property Repossessed by Federal Agencies.

American National Red Cross

Property owned by the American National Red Cross is exempt from taxation. It is considered an instrumentality of the federal government, and, therefore, is included under the supremacy clause, Department of Employment v. U. S., 87 S. Ct. 464 (1966).

Federal District Court

Property acquired by a district court is exempt as owned by the federal government. If an individual forfeits their bond, the court may order that the property used to obtain that bond be placed in the court’s ownership. This action is done by court order, and should indicate the date that this transfer occurs. If it does not, the date of the court order is the date of the transfer.

As soon as the property transfers to the court, it becomes exempt. However, if there are taxes due for the time period prior to the transfer, the county attorney should file a notice of lis pendens with the court so that the judge is aware that there is a tax lien on the property.

Internal Revenue Service (IRS)

Property seized by the Internal Revenue Service and then declared purchased by the United States or redeemed from foreclosure by the United States is exempt from property tax. Such property may be titled either in the name of the United States or the District Director of the Internal Revenue Service.

However, property of a delinquent taxpayer which is seized or levied upon, pursuant to 26, U.S.C. §6331, is not titled in the name of the United States or the District Director of the IRS. The delinquent taxpayer continues to have legal title to the property until it is sold and a deed is issued to the purchaser. Such purchaser takes the property subject to pre-existing valid liens, including liens for prior unpaid property taxes.

United States Postal Service

Property owned by the United States Postal Service is exempt from taxation. It is considered an independent branch of the federal government, and is, therefore, included under the supremacy clause. 39 U.S.C. §201.

Property Repossessed by Federal Agencies

Housing and Urban Development (HUD)

HUD will assume liability for property taxes while such real property is in HUD’s name, and will consider paying back taxes on a case-by-case basis.

Veterans Affairs (VA)

The Veterans Affairs will assume liability for property taxes while such real property is in the VA’s name, and will consider paying back taxes on a case-by-case basis.

Department of Agriculture, Farmers Home Administration (FmHA)

Farmers Home Administration will assume liability for property taxes while such real property is in FmHA’s name, and will assume liability for back taxes.

Small Business Administration (SBA)

The SBA will not assume liability for property taxes while such real property is in the name of the SBA, but will consider paying back taxes on a case-by-case basis.

Farm Credit Services (f/k/a Farm Credit Bank and Federal Land Bank)

The Farm Credit Services will assume liability for taxes while such real property is in the name of the FCB, and will consider back taxes on a case-by-case basis. The personal property of the Farm Credit Services remains exempt from property taxes.12 U.S.C. §§ 2023, 2098.

Federal Deposit Insurance Corporation (FDIC)

Real property acquired by the FDIC, when acting as a receiver of any insured national or state bank, retains the same ad valorem tax status as it had before being taken over by the FDIC. Personal property acquired by the FDIC is exempt from taxation. The real property is taxable to the FDIC from the date such property is placed in receivership. The county treasurer should file a claim with the FDIC, as the liquidating authority, for taxes attributable to the property prior to the date the property is placed in receivership.

The FDIC is exempt by federal law from payment of any penalties or fines, including penalty interest on delinquent real property taxes. 12 U.S.C. §1825(b)(3). This is true regardless of when the FDIC acquired title to the property or whether the late payment of taxes was caused by the FDIC or another party.

As a result of the dissolution of the Resolution Trust Corporation, the FDIC is now responsible for administering all RTC properties. FDIC rules apply to the property for purposes of ad valorem taxation unless there are specific provisions in the contract stating that the former RTC rules apply.

Department of Agriculture, Commodity Credit Corporation (CCC)

The CCC will assume liability for all back taxes and will assume liability for property taxes while such real property is in the name of CCC. This does not apply to special assessments for which CCC is not liable. 15 U.S.C. §713(a)(5).

Department of Commerce, Economic Development Admin. (EDA)

Where a specific obligation for taxes has accrued before the EDA takes title or accepts a deed to property, EDA normally will not pay those taxes. However, if EDA determines that it is appropriate that such taxes be paid as part of an overall liquidation of collateral, it may decide to do so on a case-by-case basis. EDA will not pay assessments for property taxes that accrue after it takes title to property.

Resolution Trust Corporation (RTC)

The RTC has been dissolved. The properties previously administered by the RTC are now handled by the Federal Deposit Insurance Corporation. These properties are subject to FDIC rules for purposes of ad valorem taxation unless the contract specifically states that RTC rules still apply. Refer to the section on FDIC properties for specifics.

United States

The violation of certain federal criminal statutes can lead to the forfeiture of property used in the commission of those offenses. Drug trafficking, money laundering, and bank fraud are three examples of such crimes.

When such a crime has been committed and an investigative body such as the Drug Enforcement Administration (DEA), the FBI, the IRS-CID, or the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) feels forfeiture may be warranted, that body would refer the case to the Department of Justice. That Department would initiate the proceedings if the case had merit. Should the courts ultimately order a forfeiture, title to the property would vest in the United States, not the investigating agency.

There are criminal and civil types of forfeiture proceedings. In terms of the United States covering outstanding tax obligations, both start from the position that title to the property vests in the United States as of the date of the offense giving rise to the forfeiture action. This is known as “relation back.” However, there are defenses in both types of cases.

On the civil side, taxing entities can claim to be “innocent owners” of their interests in the subject property. Based on the United States Supreme Court’s decision in United States v. 92 Buena Vista Ave., 113 S. Ct. 1126 (1993), the Justice Department will assume innocent owner status for taxing jurisdictions in the absence of exceptional circumstances. The result is that the United States will pay standard ad valorem property taxes up to the date of entry of an order of forfeiture.

In criminal forfeiture proceedings, a taxing entity may be able to improve its position by establishing that it received its ownership interest by being a “bona fide purchaser for value.” To date, whether this is a valid claim has not been decided in the courts. The Justice Department’s position is that taxing entities cannot make such a claim. Therefore, the doctrine of relation back applies and title vests as of the date of the offense and the property becomes exempt on that date.

When either action is commenced, the Justice Department will file a notice of lis pendens with the clerk and recorder. This serves as notice that the property is the subject of legal action. At that point, contact your county attorney so that the appropriate steps can be taken to best protect the county’s interests.

After the property has been sold by the federal government, any taxes due and owing would be paid from the proceeds of the sale.

Native American Property

There is a presumption against state taxation of property located within the boundaries of Indian Country if a particular tribe exercises jurisdiction or sovereignty over that property. Congress has defined Indian Country broadly to include formal and informal reservations, dependent Indian communities, and Indian allotments, whether restricted or held in trust by the United States. However, if anyone other than a tribal member operates upon the subject land, additional information is required to determine if the presumption against taxation still applies.

The U.S. Supreme Court provides some direction. In Cotton Petroleum Corp. et al. v. New Mexico et al., 490 U.S. 163 (1989), the U.S. Supreme Court ruled that on-reservation production of oil and gas by non-Indian lessees is taxable. The U.S. Supreme Court also struck down a Minnesota Supreme Court decision that allowed the taxation of a manufactured home located on land held in trust for members of the homeowner’s tribe, Bryan v. Itasca County, Minnesota, 426 U.S. 373 (1976). When questions arise, discuss the situation with the county attorney, and review the above case law.

In 1996, the Southern Ute Indian Tribe, La Plata County and the state of Colorado entered into a compact to address issues regarding the taxation of certain property within the Southern Ute Indian Reservation. The taxation compact can be found in § 24-61-102, C.R.S.

Federal Jurisdiction

Privately Owned Property within a Federal Enclave

Property owned by private individuals located within federal holdings may or may not be taxable. This depends on the extent to which the United States has taken jurisdiction within that area. Section 8, art. I, cl. 17, U.S. CONST., gives the United States exclusive jurisdiction over property acquired with the consent of the state.

In 1940 Congress enacted a statute (now 40 U.S.C. §255) which requires the appropriate federal official to file a statement that sets out the extent to which the federal government will accept jurisdiction. This statement is the controlling document as to the limit of federal jurisdiction for property acquired by the federal government since its enactment.

The general rule for property acquired before 1940 is that the federal government is presumed to have exclusive jurisdiction over that area. For federal enclaves acquired by the government after 1940, the statement of acceptance of jurisdiction controls. This may reserve specific powers to state or local governments. If there is no statement on record, jurisdiction has not transferred to the federal government, and the state still has authority.

Jurisdiction over many specific federal holdings is addressed in title 3 of the Colorado Revised Statutes.

State, County, City, Political Subdivisions, School Districts, and Special Districts

The property, real and personal, of the state and its political subdivisions, including counties, cities, towns, other municipal corporations, and school districts, or any cooperative association thereof, and public libraries, is exempt from taxation, § 4, art. X, COLO. CONST., and §39-3-105, C.R.S. Ownership is normally the only requirement for exemption.

Charter Schools

A charter school is a public, nonsectarian, non-religious, non-home-based school which operates within a public school district. It is a public school which is part of the district in which it is located and which is accountable to the local board of education for purposes of ensuring compliance with applicable laws and charter provisions, § 22-30.5-104(2), C.R.S.

As the statute states that a charter school is part of the school district, the property owned by a charter school is exempt pursuant to § 39-3-105, C.R.S., which exempts property owned by a school district.

With regard to property leased by a charter school, based upon our conclusion that charter schools are part of the school district in which they are located, the property is exempted pursuant to § 22-32-127(1)(b), C.R.S.

Leases or installment purchases for periods exceeding one year.

(1)(b) Under any installment purchase agreement or under any lease or rental agreement, with or without the option to purchase, or similar agreement pursuant to which the subject real or personal property is used by the school district for school district purposes, title shall be considered to have passed to the school district at the time or execution of the agreement for purposes of determining liability for or exemption from property taxation.

§22-32-127, C.R.S.

State Board of Land Commissioners

State land, under the control of this board, which is leased for development into commercial, industrial, or residential use is subject to payments in lieu of property taxes. The amount is based on what the assessed valuation of the land would be if it were privately owned, §36-1-120.5(5), C.R.S.

State Division of Parks and Wildlife

In any county in which the Division of Parks and Wildlife owns property, the board of county commissioners certifies once a year during the regular tax assessment period to the parks and wildlife commission the current dollar amount representing the negative financial impact which such ownership has on the county’s finances by considering the factors listed in §§ 30-25-302(1)(a)(I), (II), and (III), C.R.S., and the finances of any political subdivision which lies within such county.

The parks and wildlife commission then reviews those dollar amounts, and certifies those amounts to the general assembly. The general assembly may then make an appropriation in the form of an impact assistance grant to the county upon such certification, §§ 30-25-301 and 302, C.R.S. Upon receipt of an impact assistance grant, the Board of County Commissioners must pay to each school district, special district, or other political subdivision that portion of the grant attributable to the amount certified on behalf of that entity. The application process does not include real property interests acquired with funds made available from the Great Outdoors Colorado Trust Fund. Payments in lieu of taxes on those properties are addressed in § 33-60-104.5, C.R.S.

Funds Provided by the Great Outdoors Colorado Trust Fund Board

Each year during the regular tax assessment period, the board of county commissioners of each county in which a state agency holds title to property purchased with funds provided from the Great Outdoors Colorado Trust Fund provides to each state agency:

1. The current assessed value of each real property interest;
2. The amount of the payment in lieu of taxes due on each real property interest, based on the value and tax rate that would be applicable to the real property interest if it were taxable; and
3. The date the payment in lieu of taxes is due for such real property interests.

The state agency forwards this information to the Trust Fund Board, along with information concerning the portion of the total acquisition cost of the interest that was paid with moneys from the Trust Fund.

The Trust Fund Board then pays from the Trust to the state agency that portion of the payment in lieu of taxes that is equivalent to the portion of the total acquisition cost of the interest that was paid with moneys from the Trust Fund. Each state agency that receives a payment from the Trust Fund must then transmit the payment to the county. The county treasurer pays to each school district, special district or other political subdivision in which said real property interest is located its appropriate share of the total payment, minus any costs the treasurer may incur in administering this payment, § 33-60-104.5(4), C.R.S.

State Historical Society

Title to property - disbursement of revenues.

(1)The title to all property acquired by the society by gift, purchase, or otherwise shall absolutely vest in and belong to the state of Colorado when accepted or received by the society . . . .

§ 24-80-209, C.R.S.

Public Airport Authority

Authorizing legislation declared public airport authorities to be political subdivisions of the state, exercising essential governmental powers for a public purpose. As a political subdivision, exemption may be granted to the airport authority for the airport and any facilities owned by the airport, Denver Beechcraft v. Board of Assessment Appeals, 681 P.2d 945 (Colo. 1984).

Title 32 Special Districts

Ambulance, fire protection, hospital, recreation, metropolitan, park and recreation, sanitation, water and sanitation, water, tunnel, and any other districts organized under title 32, C.R.S., are considered political subdivisions of the state, and property owned by them is exempt under § 39-3-105, C.R.S.

Power Authorities

All property owned by a power authority is exempt from general taxation.

Establishment of separate governmental entity.

(1) Any combination of cities and towns of this state which are authorized to own and operate electric systems may, by contract with each other or with cities and towns of any adjoining state, establish a separate governmental entity, to be known as a power authority . . . .

§ 29-1-204, C.R.S.

Establishment of separate governmental entity.

(4) [The power authority] shall be a political subdivision and a public corporation of the state....It shall have the duties, privileges, immunities, rights, liabilities and disabilities of a public body politic and corporate....

§ 29-1-204, C.R.S.

Soil Conservation Districts

According to an opinion by the Attorney General dated July 29, 1957, property owned by a soil conservation district is exempt under § 4, art. X, COLO. CONST. as public property.

Water Authorities

All property owned by a water authority is exempt from general taxation.

Establishment of separate governmental entity to develop water resources, systems, and drainage facilities.

1) Any combination of municipalities, special districts, or other political subdivisions of this state that are authorized to own and operate water systems or facilities or drainage facilities may establish, by contract with each other, a separate governmental entity, to be known as a water or drainage authority. . . .

§ 29-1-204.2, C.R.S.

Establishment of separate governmental entity to develop water resources, systems, and drainage facilities.

(4) [The water authority] shall be a political subdivision and a public corporation of the state....It shall have the duties, privileges, immunities, rights, liabilities, and disabilities of a public body politic and corporate....

§ 29-1-204.2, C.R.S.

Downtown Development Authorities

The governing body of every municipality in the state may create and establish a downtown development authority, which shall be a body corporate, pursuant to § 31-25-803, C.R.S. All property owned by the authority is exempt from taxation.

Housing Authorities - City, County, Multi-Jurisdictional, and Middle Income

Property that is owned by or leased to a city housing authority, a county housing authority, a multi-jurisdictional housing authority, or a middle-income housing authority is exempt from both general property taxation and special assessments. City housing authorities are exempt under §§ 29-4-226 and 227, C.R.S. This includes property that is part of a project and is:

1. Occupied by low-income persons; and
2. Is not used as a store, office or other commercial facility; and,
3. Is owned by or leased to:
   1. An entity that is wholly owned by a city housing authority, or
   2. An entity in which a city housing authority has an ownership interest, or
   3. An entity in which an entity wholly owned by a city housing authority has an ownership interest.

County housing authorities are exempt in the same manner as the city housing authorities under § 29-4-507, C.R.S., which connects exemptions for county housing authorities to those set out in §§ 29-4-226 and 227, C.R.S. They also have the authority to make payments in lieu of taxes, if that is determined to be appropriate.

Multi-jurisdictional housing authorities are also exempt in the same manner. Section 29-1-204.5(10), C.R.S., provides exemptions as set out in §§ 29-4-226 and 227, C.R.S.

Multi-jurisdictional housing authorities also have the power to levy an ad valorem tax under § 29-1-204.5(3)(f.2), C.R.S. This brings these authorities under the definition of political subdivision found in § 39-1-102(12), C.R.S., and allows for exemption of property owned by these authorities under § 39-3-105, C.R.S.

Any property owned or co-owned by a middle-income housing authority is tax exempt, §29-4-1104(12)(a), C.R.S. However, property co-owned by the middle-income authority and a private entity must contain an affordable rental housing component, as defined by § 29-4-1103(1),C.R.S., to qualify for tax exempt status.

Urban Renewal Authorities

Property of an urban renewal authority, as defined in § 31-25-103(8.5), C.R.S., is exempt from all taxation, except as to any property sold or leased to a non-public entity, § 31-25-110(2), C.R.S.

Colorado Housing Finance Authority (CHFA)

The Colorado Housing and Finance Authority (CHFA) is a body corporate and a political subdivision of the state, as provided in § 29-4-704(1), C.R.S. As such, CHFA is exempt from the payment of property taxes. CHFA is authorized by statute to make payment in lieu of taxes, but has never done so.

When CHFA is involved in a joint project with a sponsor organization, CHFA may be liable for the equivalent of the property taxes depending on the status of that sponsor organization. If there is no agreement to make a payment in lieu of taxes, and the sponsor is not eligible for property tax exemption, then CHFA would pay “a sum equal to the amount of tax which the taxing entity[ies] would annually receive if title to the property were held directly by the sponsor...,” § 29-4-727(3), C.R.S.

In the past, on those properties acquired by CHFA through foreclosure, the authority has allowed the county to leave some of the single family residential properties on the tax roll. On those single-family residences for which CHFA wanted exemption, it would write the assessor and request an exemption. The remainder of those single-family residences were allowed to remain on the tax roll. CHFA has notified the Division that they are willing to continue this practice.

Fire and Police Pension Association

In 2007 the General Assembly enacted § 31-31-201(1.5), C.R.S., which exempts all real property “owned, used, and occupied” by the Fire and Police Pension Association (FPPA) and also personal property “owned and used” by the Association. Property owned by FPPA for purely investment purposes remains taxable. This statute was enacted in response to the Colorado Supreme Court’s decision in City and County of Denver v. Board of Assessment Appeals, 30 P.3d 177 (Colo. 2001).

State and County Courts

Property acquired by a state or county court is exempt as owned by a political subdivision of the state. If a bond is secured by real estate, the owner of the real estate must file a deed of trust to the public trustee with the clerk of the court that approved the bond named as the beneficiary. If an individual forfeits his bond, the court may order that the property used to obtain that bond be placed in the court’s ownership, §§ 16-4-104(3)(b) and (c), C.R.S.

This action is done by court order, and should indicate the date that this transfer occurs. If it does not, the date of the court order is the date of the transfer. As soon as the property transfers to the court, it becomes exempt. However, if there are taxes due for the time period prior to the transfer, the county attorney should file a notice of lis pendens with the court so that the judge is aware that there is a tax lien on the property.

Council of Governments

Two or more political subdivisions of the state may form and maintain an association for the purposes of promoting the interests and welfare of the several political subdivisions. An association so formed has been determined to be an instrumentality of the political subdivisions. Any property owned by the association is thus exempt from property taxes, §§ 29-1-401 and 402, C.R.S.

Colorado Uninsurable Health Insurance Plan

The Colorado Uninsurable Health Insurance Plan is a nonprofit unincorporated public entity created by the general assembly. The purpose of the plan is to provide access to health insurance for those Colorado residents who are now termed “uninsurable” because they are unable to obtain health insurance. Any property owned by this entity is exempt from property taxes, § 10-8-523, C.R.S.

Law Enforcement Authorities

The Board of County Commissioners of any county may by resolution create a law enforcement authority, which shall be a political subdivision of the state, § 30-11-404(1), C.R.S.

These entities are created for the purpose of providing additional law enforcement by the county sheriff to the residents of the developed or developing unincorporated area of the county. As a political subdivision of the state, property owned by a law enforcement authority is exempted under § 39-3-105, C.R.S.

Colorado Beef Council Authority

The Colorado Beef Council Authority is a body corporate and a political subdivision of the state, as provided in § 35-57-104(1), C.R.S. As such, property owned by the Colorado Beef Council Authority is exempt from taxation pursuant to § 39-3-105, C.R.S.

Private Property

Agricultural Equipment

Agricultural equipment, which is used on the farm or ranch in the production of agricultural products, is exempt from property taxation, § 3(1)(c), art. X, COLO. CONST. and § 39-3-122, C.R.S.

Agricultural equipment includes any mechanical system used on a farm or ranch for the conveyance and storage of animal products in a raw or unprocessed state, regardless of whether or not such mechanical equipment is affixed to real property, § 39-1-102(1.3), C.R.S.

Controlled Environment Agricultural Facility Personal Property

House Bill 22-1301 creates an exemption for personal property used in direct connection with the operation of a CEA facility for property tax years 2023 through 2027.

Agricultural and Livestock Products

Agricultural and livestock products are also exempt from property taxation, § 3(1)(c), art. X, COLO. CONST. and § 39-3-121, C.R.S.

Cemeteries

Cemetery Districts

Cemetery districts organized under article 20, part 8, and article 35, part 9, of title 30, C.R.S., are considered political subdivisions of the state, and property owned by them is exempt, § 39-3-105, C.R.S.

Cemetery Companies

Nonprofit Cemetery Companies

Cemeteries not used or held for private or corporate profit are exempt from general taxation, § 5, art. X, COLO. CONST. and § 39-3-117, C.R.S. They are also exempt from special assessments, lien, or attachment, § 7-47-106, C.R.S. However, a mortuary or funeral home located in an exempt cemetery is not exempt, § 12-135-201, C.R.S.

Profit Cemetery Companies

The property of any cemetery corporation or association organized for profit is taxable; except “when any block, lot, or parcel of land has been disposed of for cemetery purposes or burial sites for the dead, the same...shall be exempt...” from general taxation and special assessments, § 7-47-107, C.R.S. However, a mortuary or funeral home located in an exempt cemetery is not exempt, § 12-135-201, C.R.S.

Colorado Seminary (University of Denver)

A special charter was granted by the legislature of the Territory of Colorado in 1864 whereby properties owned by Colorado Seminary (now better known as the University of Denver) and used for its school purposes are exempt from taxation. The Colorado Supreme Court has taken a broad view of what it means for property to be used for school purposes. See Denver v. Colorado Seminary, 96 Colo. 109, 41 P. 2d. 1109 (1934).

County Fair Association

The real and personal property of any association duly organized under the laws of this state for the purpose of holding county fairs to promote and advance the interests of agriculture, horticulture, animal husbandry, home economics, and the mechanical attributes thereof shall be exempt from the levy and collection of property tax so long as such property is being actually and exclusively used for said purpose and not for pecuniary profit, § 39-3-127, C.R.S.

Credit Unions

A credit union is exempt from taxation on personal property only. Real estate owned by a credit union must be assessed, § 11-30-123, C.R.S.

Household Furnishings

Household furnishings - exemption.

Household furnishings, including free-standing household appliances, wall-to-wall carpeting, an independently owned residential solar electric generation facility, and security devices and systems that are not used for the production of income at any time shall be exempt from the levy and collection of property tax. If any household furnishings are used for the production of income for any period of time during the taxable year, such household furnishing shall be taxable for the entire taxable year. An independently owned residential solar electric generation facility shall not be considered to be used for the production of income unless the facility produces income for the owner of the residential real property on which the facility is located. For property tax purposes only, rebates, offsets, credits, and reimbursements specified in section 40-2-124, C.R.S., shall not constitute the production of income. For purposes of this subsection (1), for property tax purposes only, security devices and systems shall include, but shall not be limited to, security doors, security bars, and alarm systems.

§ 39-3-102, C.R.S.

Horticultural Improvements

Any increase in value of private lands arising from the planting of trees shall not be taken into account in determining the actual value of such lands for a period of thirty years from the date of planting the trees, and such condition shall apply to all lands so planted; but in the event that, prior to the expiration of thirty years, any such trees become sufficiently mature as to be of economic use and value, then any such increase in use and value shall be thereafter taken into account in determining the actual value of such lands, § 39-3-126, C.R.S.

Improvements on Otherwise Exempt Property

Some improvements located on exempt land, such as forest service land or public airport authority land, are privately owned and may be taxable. The land is leased from the exempt entity with permission from the lessor to build an improvement. Assessors should maintain current copies of all leases in order to determine the taxable or exempt status of the improvement. The leases may also create taxable possessory interests in the land.

Please refer to ARL Volume 3, REAL PROPERTY VALUATION MANUAL, Chapter 7, Special Issues in Valuation, for information on determining taxable possessory interests.

Intangible Personal Property

Intangible personal property is exempt from general taxation, §§ 39-3-118 and 39-22-611, C.R.S. Intangible personal property includes, but is not limited to, computer software, § 39-3-118, C.R.S. Section 39-22-611, C.R.S., excepts the use or inclusion of tangible personal property in the valuation of public utilities.

Inventories of Merchandise, Materials, and Supplies

Inventories of merchandise and materials and supplies which are held for consumption by a business or are held primarily for sale are exempt from property taxation, § 3(1)(c), art. X, COLO. CONST. and § 39-3-119, C.R.S.

The term is defined in § 39-1-102(7.2), C.R.S. It includes items which are: rented for 30 days or less; which can be returned at the option of the person renting the property, in a transaction on which the sales or use tax is collected on rental payments before the item is finally sold, whether or not such personal property is subject to depreciation.

It does not include inventory in the possession of the manufacturer which has previously been leased to a customer unless such inventory has been designated by the manufacturer for scrapping, substantial reconditioning, renovating, or remanufacturing. Please refer to ARL Volume 5, PERSONAL PROPERTY VALUATION MANUAL for a more detailed discussion on inventories.

Irrigation Improvements

Ditches, canals and flumes owned and used by any person for irrigating land owned by such person are exempt from separate taxation so long as they are owned and used exclusively for such purpose, § 3(1)(d), art. X, COLO. CONST. and § 39-3-104, C.R.S.

The courts have held that this statute applies to the entire irrigation system, including dams and reservoirs. This exemption does not extend to machinery and equipment used for maintenance, as stated in Logan Irrigation District v. Holt, 110 Colo. 253, 133 P.2d 530 (1943). This exemption also does not apply to domestic water companies, which are exempted pursuant to § 39-3-108(1)(c), C.R.S., and are the responsibility of the Division.

Livestock

Livestock is exempt from property taxation, § 3(1)(c), art. X, COLO. CONST. and § 39-3-120, C.R.S.

Mobile Homes and Manufactured Homes

For property tax years commencing January 1, 2022, titled mobile and manufactured homes with an actual value of $28,000 or less are exempt from the levy and collection of property taxes.

Motor Vehicles and Aircraft

Motor vehicles are required to pay a graduated annual specific ownership tax which shall be in lieu of all ad valorem taxes, § 6, art. X, COLO. CONST. and § 42-3-101(1), C.R.S

Classified personal property, including a motor vehicle, that is owned or leased by an individual or organization exempt from payment of Colorado ad valorem taxes shall be exempt from annual specific ownership tax, § 42-3-104(7), C.R.S.

A special state excise tax is imposed on all aviation fuel used in non-commercial aircraft. The gasoline tax is imposed in lieu of personal property tax on the aircraft, except as otherwise provided in article 4 of title 39, C.R.S., and §§ 43-10-111 and 39-27-102(1)(a)(IV)(A), C.R.S.

Personal Effects

Personal effects are exempt from taxation so long as they are not used for the production of income at any time, § 3 (1)(c), art. X, COLO. CONST. and § 39-3-103, C.R.S.

Soldiers’ and Sailors’ Civil Relief Act

This federal act prohibits the taxation of personal property, except that used in a trade or business, owned by United States military personnel who are stationed in the state in compliance with military orders.

This exemption is applicable to titled manufactured homes which are owned by such military personnel, and which are not permanently affixed to the realty on which they are located, 50 U.S.C.A. §574.

Works of Art

Works of art, as defined in § 39-1-102(18), C.R.S., literary materials, and artifacts loaned to, and in the custody and control of the state, a political subdivision thereof, a library or any art gallery or museum which is owned or operated by a charitable organization, as defined in § 39-26-102(2.5), C.R.S., shall be exempt. Such charitable organization’s property must be irrevocably dedicated to charitable purposes and the assets of such organization shall not inure to the benefit of any private person upon the liquidation, dissolution, or abandonment by the owner, and the works of art must be used for charitable purposes. This exemption shall apply only for the period during which such property is on loan, § 39-3-123, C.R.S.

The assessor of each county in which these works of art are displayed shall determine their value in proportion to the periods of time during which such works of art may be displayed. A copy of this valuation shall be furnished to the owner, § 39-5-113.5, C.R.S.

Works of art, which are household furnishings, are exempt if they are not used for the production of income at any time. They do not lose their exempt status if they are stored or displayed for a time on premises other than a residence.

Household furnishings - exemption.

2) [N]o work of art, as defined in 39-1-102(18), which is not subject to annual depreciation and which would otherwise be exempt under this section shall cease to be exempt because it is stored or displayed on premises other than a residence.

§ 39-3-102,C.R.S.

Private Property Leased to Public Entities

State or Political Subdivision of the State

Real and personal property acquired through an installment sales agreement or lease-purchase agreement or any other agreement is exempt if the property is used by the state or a political subdivision of the state, and the entity acquires title at the end of the agreement for no cost or nominal consideration, § 39-3-124, C.R.S.

Real Property Leased and Used by the State, a Political Subdivision, or a State-Supported Institution of Higher Education

Section 39-3-124, C.R.S., has been amended to include the following subparagraphs.

Property used by state entity – installment sales or lease agreement – lease-purchase or leveraged lease agreement - exemptions

1)(b)(I)(A) Subject to the provisions of sub-subparagraph (B) of this subparagraph (I), on and after January 1, 2009, the part of real property that is used by the state, a political subdivision, or a state-supported institution of higher education pursuant to the provisions of any lease or rental agreement for at least a one-year term, with or without an option to purchase, and pursuant to which the subject real property is used for purposes of the state, political subdivision, or institution of higher education, as applicable, shall be exempt from the levy and collection of property tax . . . .

B) The state, a political subdivision, or a state-supported institution of higher education shall reduce, deduct, or offset property taxes from rent due under any lease or rental agreement pursuant to sub-subparagraph (A) of this subparagraph (I). Upon receipt of a lease or rental agreement for the state, a political subdivision, or a state supported institution of higher education, the county assessor shall send a notice to the landlord acknowledging receipt of the lease or rental agreement. The notice shall identify the property, the property address, and the parties to the lease or rental agreement.

(C) To the extent that real property taxes are shared and payable by one or more tenants under the lease of property that are not state, a political subdivision, or a state-supported institution of higher education, real property taxes otherwise due but for the application of this paragraph (b) shall be deemed taxes paid by the property owner or the landlord of a property leased in part to the state, a political subdivision, or a state-supported institution of higher education.

(D) Only a tenant that is the state, a political subdivision, or a state-supported institution of higher education shall receive any benefit related to the tenant’s property tax-exempt status pursuant to this paragraph (b). (E) It is the general assembly’s intent that the application of this paragraph (b) be cost-neutral in that the tax reduction and the rent reduction pursuant to this paragraph (b) are equal.§ 39-3-124, C.R.S.

(E) It is the general assembly’s intent that the application of this paragraph (b) be cost-neutral in that the tax reduction and the rent reduction pursuant to this paragraph (b) are equal.

§ 39-3-124, C.R.S.

As a result, the lessee is now required to both provide the assessor a copy of the lease (including subleases), as well as notify the assessor’s office if the lease terminates before the stated term expires. The assessor must send a notice to the landlord acknowledging receipt of the lease or rental agreement. Refer to Chapter 3, Specific Assessment Procedures, of this manual for detailed information. Please see Chapter 6, Property Classification Guidelines and Assessment Percentages, of this manual for classification information. Also see individual statutes for Municipality, County, and School District under this section.

Municipality

Property, real and personal, that is leased to a municipality on a long-term basis pursuant to §§ 31-15-801 and 802, C.R.S., is exempt from taxation as long as:

1. It is used for authorized governmental or proprietary functions of municipalities; and
2. The lease was concluded by ordinance with an effective date thirty days after passage and publication.

The term “municipality” limits the exemption to a statutory city or town or to a home rule city or town, § 31-1-101(6), C.R.S.

County

Lease purchase agreements.

1) In order to provide for financing of a public park, a public trail, a public golf course, or public open space, or a courthouse, jail, or other county building or equipment used, or to be used, for governmental purposes, any county is authorized to enter into lease purchase agreements.

2) Such agreements may include an option to purchase, transfer, and acquire title to such property and the improvements thereon, if any, within a period not exceeding the useful life of such property and any improvements, but in no case exceeding thirty years.

§ 30-11-104.1, C.R.S.

Tax exemption.

1) Property financed pursuant to the provisions of section 30-11-104.1 shall be exempt from taxation so long as it is used for governmental purposes.

§ 30-11-104.2, C.R.S.

School District

Title to real or personal property leased or rented to a school district and used by that district for school district purposes shall be considered to have passed to the school district at the time of execution of the agreement for purposes of determining liability for or exemption from property taxation, § 22-32-127(1)(b), C.R.S. Consequently, such property is exempt under § 4, article X, COLO. CONST., and §§ 39-3-105, and 39-3-124(1)(b)(I)(A), C.R.S. This would also apply to properties leased to charter schools, as described in article 30.5 of title 22, C.R.S.

Sections 22-32-127 and 22-45-103(1), C.R.S., also apply to any installment purchase agreement or any lease or rental agreement entered into by a board of cooperative services or by the boards of education of the school districts participating in a cooperative service agreement, § 22-5-111(2), C.R.S.

State of Colorado Department of Labor and Employment

The Department of Labor and Employment consists of two divisions – The Division of Employment and Training, and The Division of Unemployment Insurance. The Division of Unemployment Insurance has the authority under § 8-82-101, C.R.S., to create a nonprofit corporation or authority, and in the name of this corporation or authority, purchase land and cause to be erected thereon a building or buildings suitable for offices, or for housing equipment, or for both such purposes. The Divisions may enter into rental or leasehold agreements with that nonprofit corporation or authority. The agreements must provide that the particular division acquire title to the land or buildings, or both, upon the payment of stipulated aggregate annual rentals, § 8-82-103, C.R.S. Property acquired or occupied pursuant to article 82 of title 8 shall be exempt from taxation so long as it is used for the purposes of the divisions or other public purposes, §§ 8-82-101 through 104, C.R.S.

State of Colorado Department of Transportation

Department to acquire land - buildings.

For the purpose of constructing, maintaining, and supervising the public highways of this state, the department of transportation is authorized to purchase land and cause to be erected thereon by a nonprofit corporation or authority buildings suitable for offices or for housing machines, tools, and equipment, or for both of such purposes.

§ 43-1-211, C.R.S.

Department rental agreements.

The department of transportation is authorized to enter into rental or leasehold agreements under which the department shall acquire title to such buildings within a period not exceeding thirty years upon payment of the stipulated aggregate annual rentals.

§ 43-1-212, C.R.S.

Property exempt from taxation.

Property acquired or occupied pursuant to this part 2 shall be exempt from taxation so long as it is used for state highway or other public purposes.

§ 43-1-214, C.R.S.

Housing Authorities

Please refer to Exemptions Determined by County Assessor in this chapter, for detail on Housing Authorities - City, County, and Multi-Jurisdictional.

Miscellaneous

List and Value

The assessor lists and values real property exempted from the levy and collection of property tax pursuant to § 39-3-128, C.R.S. This includes religious, private schools, and charitable real property. Although not required by statute, the assessor should value and list the other categories of exempt property in the county.

The total assessed value of each subclass of exempt property is reported on the Abstract of Assessment. Chapter 6, Property Classification Guidelines and Assessment Percentages, of this manual provides a detailed classification for exempt property, usage of which will facilitate the abstracting process.

When valuing exempt property, the assessor utilizes the correct level of value, considers all limitations applicable, and values the property the same as if the property were taxable.

Property Changing Tax Status

Whenever any previously taxable real property becomes legally exempt, the person conveying such property shall be relieved from all further tax obligations with respect to such property on the date the title is conveyed by agreement or pursuant to a court order. Likewise, whenever any previously exempt real property becomes taxable, the person acquiring title thereto shall become subject to subsequent tax obligations on the date title is acquired, § 39-3-130(1), C.R.S.

Whenever any previously taxable personal property becomes legally exempt, the exempt status becomes effective on the assessment date following the change in status. If the change in status occurred due to the conveyance of the personal property, the person conveying the property shall not be relieved of any tax obligation with respect to that personal property for the tax year in which the conveyance occurred.

Likewise, whenever any previously exempt personal property becomes taxable, the taxable status becomes effective on the assessment date following the change in status. If the change in taxable status occurred due to conveyance of the personal property, the person acquiring title is not liable for any tax obligation with respect to that personal property for the property tax year in which the conveyance occurred, § 39-3-130(1), C.R.S.

The assessor must send a Special Notice of Valuation to notify the taxpayer of any value added to the tax roll due to real property changing tax status and also of the taxpayer’s right to protest the new valuation. See Chapter 3, Specific Assessment Procedures, of this manual for circumstances warranting a special notice of valuation.

Property Changing Tax Status - Public Roads and Highways

When taxable real property is acquired by condemnation and used for public highways, the date of the possession and use agreement is the date the property becomes exempt. This document, because it does not convey real property, typically, is not seen by the assessor. The Colorado Department of Transportation notifies county treasurers or assessors by letter, giving notice of property that will become exempt as of the date of possession. If the property is acquired through a court order, the Colorado Attorney General will send notification to the county. Proceedings through cities and towns may vary. Typically, municipalities have possession and use agreements or file a court order for possession. The language in the possession and use agreements may contain provisions requiring the current owner to notify the assessor of possession by the municipality. The statutes governing cities and towns are found in articles 6 and 7 of title 38, C.R.S.

The current owner may still be using the property, but it is no longer taxable even before a deed of conveyance is recorded.

Property exempt from taxation.

Property acquired or occupied pursuant to this part 2 shall be exempt from taxation so long as it is used for state highway or other public purposes.

§ 43-1-214, C.R.S.

Condemnation by tax exempt agency - duties of treasurer.

In all cases where an entire property, or a portion of any parcel, tract, or lot of real property, is likely to become exempt from the levy and collection of property tax through exercise of the power of eminent domain, the treasurer shall be joined as a party respondent in any such eminent domain action . . . .

§ 39-3-134, C.R.S.

Tax exemption.

The accomplishment by the department of transportation of the authorized purposes stated in this part 2 being for the benefit of the people of the state and for the improvement of their commerce and prosperity in which accomplishment the department of transportation will be performing essential governmental functions, the department of transportation shall not be required to pay any taxes or assessments on any property acquired or used by it for the purposes provided in this part 2.

§ 43-3-209, C.R.S.

Treaties

Consular and embassy premises and the residence of its career head, of which the sending state or any person acting on its behalf is the owner or lessee, may be exempt from taxation. These exemptions are dependent upon specific agreements between the United States government and the foreign country.

If the property is owned individually, under no circumstances does the property qualify for exemption based on the Vienna Convention on Consular Relations Treaty. Additionally, no treaty exists with the Mexican government which provides exemption from property taxation of individually owned residences.

The Exemptions Section of the Division of Property Taxation maintains a listing of treaties, and upon request, will assist counties in determining the exempt status of these properties.

Exemptions Determined by the Administrator

All applications for exemption of privately owned property that is owned and used solely and exclusively for religious purposes, for private schools, or for strictly charitable purposes are submitted to the Property Tax Administrator. The Administrator reviews each application to determine whether the exemption is justified and in accordance with the intent of the law.

Statute restricts property tax collection efforts while an application is pending. Section 39-2-117(1)(a)(II), C.R.S., says:

Applications for exemption – review –annual reports -procedures.

(1)(a)(II) On all properties for which an application is pending in the office of the administrator, taxes shall not be due and payable until such determination has been made. Such property shall not be listed for the tax sale, and no delinquent interest will be charged on any portion of the exemption that is denied.

§ 39-2-117, C.R.S.

To aid counties in complying with this restriction, no later than June 1 of each year the Administrator shall provide to the assessor, treasurer, and board of county commissioners of each county a list of all applications pending within their county, § 39-2-117(1)(a)(III), C.R.S. Please see Chapter 3, Specific Assessment Procedures, of this manual for more information.

Section 7-90-107, C.R.S., prohibits public agencies from collection or disclosing memberspecific data of non-profit entities that are tax exempt, unless permitted by law or rule, or necessary to enforce compliance.

Listed below are the pertinent statutes relating to the exemptions determined by the Property Tax Administrator.

Religious Purposes

Property, real and personal, which is owned and used solely and exclusively for religious purposes and not for private gain or corporate profit is exempt. The general assembly has declared that religious worship has different meanings to different religious organizations; that the constitutional guarantees regarding establishment of religion and the free exercise of religion prevent public officials from inquiring as to whether particular activities of religious organizations constitute religious worship; that many activities of religious organizations are in the furtherance of the religious purposes of such organizations; that such religious activities are an integral part of the religious worship of religious organizations; and that activities of religious organizations which are in furtherance of their religious purposes constitute religious worship for purposes of § 5, art. X, COLO. CONST., § 39-3-106, C.R.S.

When property, which is otherwise exempt pursuant to § 39-3-106, C.R.S., is used for non-exempt purposes, the property remains completely exempt as long as the non-exempt uses are less than 208 hours per year; or income from those uses is less than $10,000 in gross rental income and less than $10,000 in unrelated trade or business income, during the calendar year, § 39-3-106.5 (1.5), C.R.S.

Private Schools

Property, real and personal, which is owned and used solely and exclusively for schools which are not held or conducted for private or corporate profit is exempt. School is defined in § 39-1-102(15.5)(a), C.R.S., as:

Definitions.

(15.5)(a) “School” means: (I) An educational institution having a curriculum comparable to that of a publicly supported elementary or secondary school or college, or any combination thereof, and requiring daily attendance; or 

(II) An institution that is licensed as a child care center pursuant to part 3 of article 5 of title 26.5, C.R.S., that is:

(A) Operated by and as an integral part of a not-for-profit educational institution that meets the requirements of subparagraph (I) of this paragraph (a); or

(B) A not-for-profit institution that offers an educational program for not more than six hours per day and that employs educators trained in preschool through eighth grade educational instruction and is licensed by the appropriate state agency and that is not otherwise qualified as a school under this paragraph (a) or as a religious institution.

(b) “School” includes any educational institution that meets the requirements set forth in subparagraph (I) or (II) of paragraph (a) of this subsection (15.5), even if such educational institution maintains hours of operation in excess of the minimum hour requirements of section 22-32-109(1)(n)(I), C.R.S.

§ 39-1-102, C.R.S.

When property, which is otherwise exempt pursuant to § 39-3-107, C.R.S., is used for non-exempt purposes, the property remains completely exempt as long as the non-exempt uses are occasional and non-continuous, and are less than 208 hours or result in less than $25,000 in gross rental income during the calendar year, § 39-3-106.5(2), C.R.S.

Strictly Charitable Purposes

Property, real and personal, that is owned and used solely and exclusively for strictly charitable purposes and not for private gain or corporate profit is exempt, contingent upon its qualifying under one of the statutes below.

When property, which is otherwise exempt pursuant to §§ 39-3-108 through 113.5, 116, and 127.7, C.R.S., except for §§ 39-3-108(3) and 111, C.R.S., is used for non-exempt purposes, the property remains completely exempt as long as the non-exempt uses are occasional and non-continuous, and are less than 208 hours or result in less than $25,000 in gross rental income during the calendar year, § 39-3-106.5(2), C.R.S.

Property may be exempted as owned and used for strictly charitable purposes if:

1. Such property is nonresidential. This exemption statute is used whenever an entity and its operation do not specifically fit within any of the other ‘charity’ statutes, but its operations are charitable § 39-3-108(1)(a), C.R.S. The Colorado courts have adopted this definition of charity:
   A gift to be applied consistently with existing laws, for the benefit of an indefinite number of persons, either by bringing their minds or hearts under the influence of education or religion, by relieving their bodies from disease, suffering or constraint, by assisting them to establish themselves in life, or by erecting or maintaining public buildings or works, or otherwise lessening the burdens of government. See United Presbyterian Association et al. v. Jefferson County Board of Commissioners, 167 Colo. 485, 448 P.2d 967 (1968).
2. Such property is licensed by the state of Colorado as a health care facility. When property, or any portion thereof which is otherwise exempt pursuant to this statute is used for non-exempt purposes, the property, or any portion thereof, remains completely exempt as long as the gross income derived from any unrelated trade or business to the owner does not exceed fifteen percent of the total gross revenues derived from the operation of the property, §§ 39-3-108(1)(b) and (3)(a), C.R.S., and Jefferson County Board of Commissioners v. Property Tax Administrator, 989 P.2d 227 (Colo. App. 1999).
3. Such property is used as an integral part of a nonprofit domestic water company, § 39-3-108(1)(c), C.R.S. A nonprofit domestic water company is defined for this purpose as “any company which has as a major function the providing of water for human consumption within the state of Colorado. This does not include irrigation companies.”
4. Such property is nonresidential and is owned and used exclusively by a qualified amateur sports organization. “Qualified amateur sports organization” means any organization organized and operated exclusively to foster local, statewide, national, or international amateur sports competition if such organization is also organized and operated primarily to support and develop amateur athletes for national or international competition in sports; except that no part of the net earnings of such organization inure to the benefit of any private shareholder or individual, § 39-3-108(1.3), C.R.S.
5. Such property is residential and is used as an integral part of a church, an eleemosynary hospital, an eleemosynary licensed health care facility, a school, or an institution whose property is otherwise exempt from taxation, and the property is not leased or rented at any time to persons other than:
   1. Persons who are attending such school as students, or
   2. Persons who are actually receiving care or treatment from such hospital, licensed health care facility, or institution for physical or mental disabilities and who, in order to receive such care or treatment, are required to be domiciled within such hospital, licensed health care facility, or institution, or within affiliated residential units, § 39-3-109, C.R.S.
6. Such property is used as an integral part of a child care center, which, pursuant to § 39-3-110, C.R.S.:
   1. Is licensed pursuant to part 3 of article 5 of title 26.5, C.R.S.;
   2. Is maintained for the whole or part of a day for the care of five or more children under the age of sixteen years;
   3. Is not owned or operated for private gain or corporate profit;
   4. The costs of operation of which, including salaries, are reasonable based upon the services and facilities provided and as compared with the cost of operation in any comparable public institution;
   5. Provides its services to an indefinite number of persons free of charge or at reduced rates equal to five percent of the gross revenues of such child care center or equal to ten percent of the amount of tuition charged by such child care center to the financially needy or charges on the basis of ability to pay;
   6. The operation of which does not materially enhance, directly or indirectly, the private gain of any individual except as reasonable compensation for services rendered or goods furnished; and
   7. The property of which is claimed for exemption does not exceed the amount of property reasonably necessary for the accomplishment of the exempt purpose.
      NOTE: If a child care center is privately owned and is rented to, leased to, or otherwise operated by a person other than the owner, exemption is based solely on the user’s use of the property. The provisions of this statute do not apply to any child care center which is operated for religious purposes and which is exempt pursuant to the provisions of §§ 39-3-106 or 106.5, C.R.S., or to any child care center which qualifies for exemption as a school pursuant to §§ 39-1-102(15.5) and 39-3-107, C.R.S.
7. Such property is owned and used by a fraternal or veterans organization if the organization meets the following criteria, § 39-3-111, C.R.S.
   1. The organization fits the description in §§ 24-21-602(18) or (43), C.R.S., except for the organization being in existence for five years.
   2. The net income from the use of such property is irrevocably dedicated to religious, school, or charitable purposes, and to the purpose of operating and maintaining such organization.
   3. The use of the property for non-exempt purposes is non-continuous and such use either: (a) amounts to less than 208 hours during the calendar year; or (b) results in less than $25,000 annual gross rental income for the owner.
8. Such property is owned by a nonprofit corporation, and is used by one or more physicians or dentists, or both, licensed to practice medicine or dentistry under the laws of the state of Colorado. Health care services must be provided to patients who request such services, and the financially needy must be charged based upon their ability to pay. In addition, the Board of County Commissioners must certify that a need exists for the provision of such health care services, § 39-3-111.5, C.R.S.
9. Such property is residential, and is:
   1. occupied as an orphanage, or
   2. occupied by single individuals sixty-two years of age or over, or disabled as described in § 39-3-112 (1)(a.3), or by a family, the head of which is sixty-two years of age or over or disabled, whose incomes are within one hundred fifty percent of the limits prescribed for similar individuals or families who occupy low-rent public housing operated by a city or county housing authority which is nearest to the subject property, or
   3. occupied exclusively by single-parent families residing in a family service facility, as defined in § 39-3-112(1)(b), C.R.S., whose incomes are within one hundred fifty percent of the limits prescribed for similar individuals or families who occupy low-rent public housing operated by a city or county housing authority which is nearest to the subject property, and such family service facility is owned by an organization exempted from federal income tax pursuant to section 501(c)(3) of the Internal Revenue Code, or
   4. occupied by individuals or families who are homeless or abused or who have resided in a shelter for the homeless during the past six months residing in a transitional housing facility, as defined in § 39-3-112(1)(c), C.R.S., whose incomes are within one hundred fifty percent of the limits prescribed for similar individuals or families who occupy low-rent public housing operated by a city or county housing authority which is nearest to the subject property, and such transitional housing facility is owned by an organization exempted from federal income tax pursuant to section 501(c)(3) of the Internal Revenue Code, or
   5. operated as an “elderly or disabled low-income residential facility,” with a portion being occupied exclusively by elderly or disabled persons who meet the requirements of subsection (b) above, and the remainder being operated as a health care facility which is licensed by the state of Colorado.
   6. Beginning January 1, 2003, low-income housing is exempt if the property is
      1. operated as a residential facility for low-income households;
      2. for which the published rent schedule includes rents that a low-income
         household can afford by expending no more than thirty percent (30%) of the low-income household’s total income for rent and utilities, and;
      3. for which the owner of the facility has shown that the rent for the facility for which the exemption authorized applies is lower than the rent for a comparable facility for which said exemption does not apply by an amount equal to at least the value of said exemption, § 39-3-112(1)(b.5), C.R.S.
      4. Low-income household means an individual or family whose total income is no greater than thirty percent (30%) of the area median income as published annually by the United States Department of Housing and Urban Development, §§ 39-3-112(1)(a) and (b.3), C.R.S.
      5. In a departure from all other exemptions administered by the Division, properties used in the manner described in subsections (b), (d), and (f) above may be exempted even though they are not owned by a nonprofit organization. These properties may also be owned by a limited partnership of which a nonprofit corporation is the general partner, or by a limited partnership of which all of the general and limited partners are nonprofit corporations.
      6. In addition, properties used in the manner described in subsection (e) or (f) above may be owned by a limited partnership where each of the general partners is a for-profit corporation, seventy-five percent or more of the outstanding stock of which is owned by, and seventy-five percent or more of the members of the board of directors of which is elected by, one or more nonprofit corporations.
      7. Except in cases where all general and limited partners are nonprofit corporations, the limited partnership must have been formed for the purpose of obtaining low-income housing tax credits pursuant to section 42 of the Internal Revenue Code of 1986, and an allocation of those credits must have been made to the structure for which the exemption is sought
10. Such property is owned by the United States, and is leased by the U.S. to any nonprofit organization  for the purpose of housing individuals or families who are homeless, § 39-3-112.5, C.R.S.
11. Such property is owned and used by a nonprofit community corrections agency for a community correctional facility or program, and the agency is exempt from federal income tax pursuant to the Internal Revenue Code, § 39-3-108.5, C.R.S.

12. Such property is acquired by a nonprofit housing provider upon which the provider intends:

    The property is deemed as being used for strictly charitable purposes, regardless of whether or not there is actual physical use of the property, and shall be exempt from property taxation. For property tax years commencing on or after January 1, 2011, in determining whether a nonprofit housing provider satisfies the intent requirement of subsection (2) with respect to particular property, the Administrator may consider, but is not limited to, indicators of intent as provided in this subsection, § 39-3-113.5, C.R.S.

    In cases where the property is sold to low-income applicants for the purpose of constructing or rehabilitating housing as mentioned in 12.b., the exemption remains in effect until a certificate of occupancy is issued for the property or for one year, whichever is shorter.

    A property tax exemption allowed to a nonprofit housing provider by § 39-3-113.5, C.R.S. is subject to the following limitations:

    1. The exemption may be allowed for a maximum of ten consecutive property tax years beginning with the property tax year in which the nonprofit housing provider obtained title to the property; and
    2. If the nonprofit housing provider is allowed an exemption for any property tax year and subsequently sells, donates, or leases the property to anyone other than a low-income applicant or to a community land trust or nonprofit housing provider intending to sell the improvements on the property to a low-income applicant and lease the underlying land to the low-income applicant through a land lease, the provider shall be liable for all property taxes that the provider did not previously pay due to the exemption.
13. Such property is acquired by a community land trust or a nonprofit affordable homeownership developer, is split into a separate taxable parcel from the improvements, and leased to the owner of the improvements as an affordable homeownership property, § 39-3-127.7, C.R.S.
    
    An affordable homeownership property is defined under § 39-3-127.7(2)(a), C.R.S., as a dwelling restricted by a deed that impacts ownership of the property, limits its resale price, requires a long-term land lease with a community land trust or a nonprofit affordable homeownership developer, or any other restriction such that it may only be purchased by a qualifying household, community land trust, or nonprofit affordable homeownership developer. The property must also be sold to a household that is at or below 100 percent of the area median income at the time of purchase, and which will use the property as its primary residence.
    
    The owner of the real property that qualifies for exemption under § 39-3-127.7, C.R.S., must submit the land lease for each qualifying real property to the appropriate county assessor within twenty-five days of the initial execution of the land lease, § 39-3-127.7(6), C.R.S.

Initial Determination of Exemption

Property which is owned and used solely and exclusively for religious purposes, for private schools, or for strictly charitable purposes is exempt, §§ 39-3-106 through 113.5, 116, and 127.7, C.R.S. These exemptions are conditioned upon the nature of the owner, user, if applicable, and the specific use of the property. All such exemptions must be determined by the Property Tax Administrator upon the written application of the owner. Each application is reviewed, and if it is determined that the exemption is justified and in accordance with the intent of the law, the exemption is granted. The exemption is to be effective upon such date as the Administrator shall determine, as specified in § 39-2-117(1)(a), C.R.S., but in no event shall such exemption apply to any year prior to the year preceding the year in which application is made.

Generally, exemptions determined by the Administrator are for property owned and used solely and exclusively for religious, schools, or strictly charitable purposes and not for private gain or corporate profit. But there are two situations that deviate from this:

1. Pursuant to § 39-3-112, C.R.S., property used for certain residential purposes may be owned by an organization that includes a non-qualifying entity. For additional information, see Strictly Charitable Purposes.
2. Pursuant to § 39-3-127.5, C.R.S, when property is owned by a qualified business entity (QBE), only the general partner or managing member needs to qualify for property tax exemption under §§ 39-3-106 to 39-3-113.5 and 39-3-127.7, C.R.S. A QBE is formed for the purposes of obtaining federal tax credits.

For applications filed on or after January 1, 2013, or that are pending on that date, the State Board of Equalization may authorize the Administrator to make an exemption effective for additional time but “not more than the time allowed pursuant to section 39-10-101(2)(b)(II) when the property has been added back to the tax roll as omitted property,” § 39-9-109(6), C.R.S.

The property owner is required to send the application for exemption to the county assessor of the county in which the property is located. All applications received by the assessor’s office are date-stamped and logged. In addition, the assessor verifies the ownership and legal description of the property and promptly forwards the application, and the accompanying check, to the Administrator for processing.

Applications for exemption – review –annual reports – procedures - rules.

(2) No assessor shall classify any real or personal property as being exempt from taxation pursuant to the provisions of sections 39-3-106 to 39-3-113.5, 39-3-116, or 39-3-127.7 in any year unless the application for exemption for the current year has been reviewed and has been granted as provided by law, nor shall any assessor classify any real or personal property as being taxable after having been notified in writing that such property has been determined to be exempt from taxation by the property tax administrator.

§ 39-2-117, C.R.S.

Forms for claiming exemption are furnished by the Division of Property Taxation without charge. There are two separate application forms, one for property being applied for under the religious purposes statute, and a second for property being applied for under the private school or charitable purposes statutes. The initial application for exemption must be accompanied by a two hundred dollar fee ($200). This fee may be adjusted annually for inflation or deflation, § 39-2-117(1)(a)(I), C.R.S.

An applicant claiming property tax exemption pursuant to § 39-3-127.7, C.R.S. is only required to submit one application for all parcels in connection with the subdivision, but must submit the appropriate filing fee commensurate with the number of parcels in the subdivision being applied for, § 39-3-127.7(7)(a)(I).

Prior to a denial of an exemption, the Property Tax Administrator is required to provide an opportunity for the owner (and qualified users pursuant to §§ 39-3-101, 106 to 113.5, and 116, C.R.S.) of the property to be heard at a public hearing before the Property Tax Administrator or her designee. If the finding is against the owner, the owner and users will have sixty days to comply in order to qualify for the exemption, § 39-2-117(5)(a), C.R.S.

Annual Exempt Property Reports

The owners of all properties, which have been granted exemption pursuant to §§ 39-3-106 to 113, 116, or 127.7, C.R.S., must annually file a report with the Property Tax Administrator on or before April 15 together with a hone hundred ten dollar fee ($110). For property exempted under the school or charitable statutes, if the annual exempt property report is filed later than April 15, but before July 1, the late filing fee is three hundred dollars ($300), § 39-2-117(3)(a)(I), C.R.S.

For property exempted under the religious statute, if the annual exempt property report is filed later than April 15, but before July 1 of the following year, the late filing fee is three hundred dollars ($300), § 39-2-117(3)(a)(III), C.R.S.

The filing fees may be adjusted annually for inflation or deflation. The Administrator has the authority to waive all or a portion of the late filing fee for good cause shown, § 39-2-117(3)(a)(I), C.R.S.

The owners of all properties which have been granted exemption pursuant to § 39-3-111, C.R.S., are not required to file the annual exempt property report if:

1. The property has been used for non-qualifying purposes for less than 208 hours during the calendar year, or
2. The use of the property for those non-qualifying purposes results in annual gross rental income to the owner of less than $25,000.

The owners of properties exempted pursuant to § 39-3-111, C.R.S., are still required to file a declaration of the above facts. The declaration is found on the annual Exempt Property Report form, § 39-2-117(3)(a)(I), C.R.S.

Pursuant to § 39-3-127.7(7)(a)(II), community land trusts and nonprofit affordable homeownership developers may submit one annual report for multiple parcels in connection with a subdivision, however payment must be commensurate with the number of exempt parcels. When a subdivided exempt real property parcel, typically land, is split into a separate taxable parcel from the improvements and leased to the improvement owner as affordable homeownership property, then the owner or agent of the exempt real property must file an individual annual report for the subdivided parcel, § 39-3-127.7(7)(b).

Exempt Property Report forms are provided by the Division and are mailed around the first of March to all owners of property for which exemption has been granted or continued by the Administrator.

A copy of the exempt property master record, for each county, is furnished annually to the county assessor. This master record lists all property for which exemption has been granted, or continued, by the Administrator and no additional property may be classified as being exempt under these provisions except upon notification by the Administrator of the granting of such exemption.

The assessor should consider that the continued exemption of the listed property has been approved unless notified that such exemption has been declared forfeited, or has been revoked by the Administrator.

Forfeitures

Exemption is forfeited if the exempt property owner fails to file an annual report by July 1, either of the current year, if the exemption is pursuant to the school or charitable statutes, or July 1 of the following year, if the exemption is pursuant to the religious purposes statute, §§ 39-2-117(3)(a)(II) and (III), C.R.S. The owner may, following that forfeiture, file a new application for that forfeited property. For forfeitures issued after July 1, 2011, exemption will be effective no earlier than the date upon which the application was filed. The owner may also petition the State Board of Equalization for a waiver of the filing deadline. Under § 39-9-109(5), C.R.S., the state board may allow a post-deadline filing when the “interests of justice and equity would be served thereby.” This may result in exemption for the forfeited time period.

In the case of a forfeiture, the Administrator notifies the owner, the assessor, the treasurer and the county commissioners of the loss of exemption due to failure to file an annual report. The assessor notifies the owner that the property has become taxable and allows a period of time for the owner to protest the value. This is accomplished by mailing a Special Notice of Valuation to the owner. The Division recommends the owner be provided a 30-day protest period. Procedures for issuing a Special Notice of Valuation can be found in Chapter 3, Specific Assessment Procedures.

Revocations

Exemptions may be revoked for the following reasons:

1. Inclusion of false or misleading information in the initial application or the annual report, or any false information provided by owners or users, § 39-2-117(4), C.R.S.
2. Termination of qualified use through:
   1. Vacation of the property by the existing exempt owner and/or qualifying user.
   2. Change in usage of the property by the exempt owner.
   3. Use by another organization which does not qualify under §§ 39-3-106 through 113.5, 116, and 127.7, C.R.S.
3. Change in the organization so as to no longer qualify as a religious or charitable organization or as a school, §§ 39-3-106 through 113.5, 116, and 127.7, C.R.S.
4. Failure to provide sufficient information on an annual report to justify the continuation of the exemption.

Prior to the revocation of an exemption, the Property Tax Administrator is required to provide an opportunity for the owner and users of the property to be heard at a public hearing before the Property Tax Administrator or her designee, § 39-3-116, C.R.S. If the finding is against the owner, the owner and users will have sixty days to comply in order to retain or regain the exemption, § 39-2-117(5), C.R.S.

In the case of a revocation, the Administrator notifies the owner and the assessor of the loss of exemption. The assessor must mail a Special Notice of Valuation to the owner and allow a period of time for the owner to protest the value. The Division recommends that the owner be provided a 30-day protest period. Procedures for issuing a Special Notice of Valuation can be found in Chapter 3, Specific Assessment Procedures.

Prorations are calculated based on the date specified on the notice issued by the Administrator. Proration procedures can be found in Chapter 4, Assessment Math.

Property owners who lose their exemptions due to failure to file sufficient information as noted in item 4 above may obtain a waiver of the balance of taxes owed contingent upon the reestablishment of the organization’s tax exempt status by the Property Tax Administrator, as authorized by the State Board of Equalization, § 39-3-137(2), C.R.S.

NOTE: With the passage of SB 09-042, the State Board of Equalization may authorize the Property Tax Administrator to reestablish tax-exempt status for any organization that meets the criteria specified in (a) to (d) of subsection (1) of § 39-3-137, C.R.S., and that paid all or any portion of the property tax bill for a year or years in which the organization was denied tax-exempt status, § 39-3-137(3), C.R.S.

Transfer of Title of an Exempt Property

Whenever assessor’s personnel process a transfer on a property that has been granted an exemption by the Division, a copy of the deed should be forwarded to the Division as owners rarely remember to notify the Division when property is sold. Such a property should be appraised and assessed and the new owner notified by Special Notice of Valuation. See Loss of Exempt Status Because of Transfer of Property in Chapter 3, Specific Assessment Procedures.

If it appears that the new owner might also qualify for exemption, the owner should be contacted by the assessor’s office with instructions to either contact the Exemptions Section at the Division, or to visit the Division’s website to get an application form. Exemptions do not run with the land, and each new owner must be granted its own exemption. A good example of this is when one church sells its property to another, even if the churches appear to be affiliated. The new church must apply for its own exemption. It is important to notify the new owner promptly that an application must be filed. The Administrator may not grant an exemption for tax years earlier than the year prior to the year in which the application was filed. Delay in notifying the owner could result in the denial of the opportunity to apply for exemption for years in which it could be granted. There are no remedies such as abatements available to those who fall outside the noted time frame.

If personal property loses exempt status, the property is not taxable until the following January 1.

Rules

The Division has extensive rules and regulations governing both property tax exemptions and the procedures used to determine those exemptions. Copies of the rules and regulations are available from the Exemptions Section at the Division of Property Taxation.

Addendum 10-A, Statutory Exemptions

Statutory Exemptions by Category of Property

The following is a reference list of categories of exempt property and the corresponding statutory citations.

*Exemption initially must be granted and subsequently reviewed annually by the Property Tax Administrator. Questions regarding these exemptions should be directed to the Division of Property Taxation, Exemptions Section.