Two rental houses in the Denver metro can show the same actual value on the assessor’s roll and carry the same total mill levy, and still produce different property tax bills. Colorado stopped using a single residential assessment rate, and most rental pro formas never caught up.
This post walks through how Denver rental property taxes are actually calculated in 2026, the two rates that apply to the same house, a worked example you can copy into your own model, and the six places landlords get this wrong. By the end you will be able to rebuild a property tax line from the assessor’s data instead of trusting whatever the listing sheet says.
What Determines Denver Rental Property Taxes
Three inputs drive the bill. Get any one of them wrong and the whole line is wrong.
Actual value. This is the assessor’s estimate of market value, not your purchase price. Colorado revalues real property every odd-numbered year, so the value on your 2026 statement was set in the 2025 reassessment. For tax years 2025 and 2026, assessors work from comparable sales between January 1, 2023 and June 30, 2024, according to the Colorado Division of Property Taxation. Your closing price in 2026 does not reset it.
Assessment rate. The percentage of actual value that becomes assessed value. Colorado residential property now uses two of them. For 2026 the Division of Property Taxation lists 7.05 percent for school district levies and 6.80 percent for local government levies, and the local government side applies after a 10 percent reduction of the first $700,000 in actual value.
Mill levy. The tax rate set each fall by every taxing entity that touches your parcel: school district, city and county, and any special districts. One mill equals one dollar of tax per thousand dollars of assessed value. Your statement shows the levies broken out. Use those figures, not a metro average.
The Formula for Colorado Property Tax
The calculation runs in two steps, and in Colorado it runs twice for the same house.
Assessed Value = Actual Value × Assessment Rate
Property Tax = Assessed Value × Mill Levy ÷ 1,000
Because residential property carries one assessment rate for school levies and a different one for everything else, you compute two assessed values and apply each to its own slice of the mill levy. Add the results. That sum is your annual bill.
Worked Example: A $600,000 Denver Rental
Inputs:
- Actual value on the assessor’s roll: $600,000
- School assessment rate: 7.05 percent
- Local government assessment rate: 6.80 percent, after a 10 percent reduction of the first $700,000 in actual value
- School district levy: 45 mills (use the figure on your own statement)
- Local government and special district levies: 31 mills (same note)
School side. The full actual value carries the school rate:
$600,000 × 7.05 percent = $42,300 assessed
$42,300 × 45 ÷ 1,000 = $1,903.50
Local government side. First the reduction, then the rate:
10 percent of $600,000 = $60,000 reduction
$600,000 minus $60,000 = $540,000
$540,000 × 6.80 percent = $36,720 assessed
$36,720 × 31 ÷ 1,000 = $1,138.32
Add the two sides:
$1,903.50 + $1,138.32 = $3,041.82 per year
That is about $253 a month in your operating expense line, or two payments of $1,520.91 if you split it. Run the same property the lazy way, one rate of 7.05 percent applied to the full $600,000 against all 76 mills, and you get $3,214.80. You would have overstated the expense by $172.98 a year and misstated a number you carry through the entire hold.
Property tax is one of the seven inputs that decide whether a deal works. The others are laid out in our complete guide to rental property analysis.
Why the Seller’s Tax Bill Is Not Your Tax Bill
The single most common error in Denver underwriting is copying the current tax figure off a listing sheet and moving on. That number reflects the last reassessment, and reassessment runs on the state’s odd-year cycle rather than on your closing date.
Two things follow. First, the bill you inherit at closing is anchored to a valuation window that closed on June 30, 2024. If Denver values moved after that date, your line item is stale in a direction you can predict but have not modeled. Second, the next revaluation is not a surprise event. It is scheduled. A landlord who models a flat tax line across a five year hold has quietly assumed something the statute says will not happen.
There is no single correct growth rate to plug in, and anyone who hands you one without looking at your parcel is guessing. What works is a range. Build the base case on the current assessed values, then run a second case that steps the actual value up at the next odd-year revaluation and recomputes both sides of the bill. If the deal only clears in the base case, it is thinner than it looks. The same discipline applies to the cash-on-cash return you quote yourself, because taxes hit cash flow directly and cash flow is the numerator.
6 Mistakes Denver Landlords Make on Property Taxes
1. Underwriting from the seller’s tax bill. The listing figure is a historical artifact. Fix: pull the parcel’s actual value and current levies from the assessor, then rebuild the bill yourself using the two step math above.
2. Applying one assessment rate. Most spreadsheets still carry a single residential rate from before Colorado split it. Fix: compute a school assessed value and a local government assessed value separately, and make them separate cells so the next rate change is a one cell edit.
3. Confusing the assessment rate with the tax rate. Multiplying actual value by 6.80 percent and stopping gives you assessed value, not tax owed. Fix: always finish the second step, assessed value times mills divided by 1,000.
4. Missing the 10 percent reduction, or applying it twice. It applies to the first $700,000 of actual value and only on the local government side. On a $900,000 property the reduction is $70,000, not $90,000. Fix: cap the reduction at $70,000 in the formula rather than typing a flat 10 percent.
5. Dividing the annual bill by twelve and calling it cash flow. Colorado taxes are payable in full by April 30 or in two halves, the first due by the last day of February and the second by June 15. Fix: model the actual payment dates in your cash flow schedule, hold the accrual monthly, and make sure the reserve is funded before February.
6. Comparing Denver to a suburb on mills alone. A lower total levy in an adjacent jurisdiction can still produce a higher bill if the school and local split differs, because the two sides sit on different assessed values. Fix: compare completed bills, not headline mill rates.
Your Denver Property Tax Checklist
- Pull the parcel’s current actual value and full levy breakdown from the assessor before you write an offer.
- Split your tax calculation into two lines in the model, school and local government.
- Cap the local government reduction at 10 percent of the first $700,000 of actual value.
- Recompute the annual bill from scratch instead of copying the seller’s figure.
- Enter the February, April, and June due dates into your cash flow schedule rather than a flat monthly twelfth.
- Build a second case that steps actual value up at the next odd-year revaluation.
- Note the appeal deadline on your calendar the day the notice of valuation arrives.
- Check the tax line against your other expense assumptions, because a property tax error usually travels with an insurance error.
Once the tax line is right, the metrics built on top of it start to mean something. A cap rate computed on an understated expense load is not a cap rate, it is a sales pitch. And while you are in the expense detail, it is worth confirming you are capturing everything you are entitled to at tax time, which we cover in 9 landlord tax deductions most investors miss.
Get the Numbers Right Before You Sign
Most of the Denver deals we review do not fail on the purchase price. They fail on three or four expense lines that were estimated instead of calculated, and property tax is almost always one of them. Our free calculators will get you through a first pass, and if you want someone to build the model properly around your actual parcels, that is what our Denver fractional CFO work is for.
You can also book a free 20 minute consult and walk through a deal you are looking at now. Bring the assessor’s page open in another tab.
A tax line is not a guess you refine later. It is arithmetic with published inputs, and it takes about ten minutes to do correctly.
Simply Spreadsheets helps real estate investors and small business owners make confident decisions with clean, reliable numbers. Founded by Erin Onsager, a fractional CFO with more than 20 years of finance experience, the firm builds custom spreadsheets, financial models, and analysis that turn raw data into clear answers.
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