Many older Coloradans and\nveterans with disabilities have come to rely on the tax savings they receive\nfrom the state\u2019s senior homestead property exemption. Although the original\nintent of the law was to allow more people to remain in their homes, analysis\nof the available data by the Colorado Fiscal Institute found the exemption does\nnot help as many people as it could. That analysis showed:<\/p>\n\n\n\n
- About half of older Coloradans don\u2019t qualify for the exemption, either because they rent or because they haven\u2019t lived in their homes for more than 10 years.<\/li>
- The exemption disproportionately benefits white homeowners over homeowners of other races.<\/li>
- Those who qualify for the exemption are slightly less likely to be experiencing poverty than all older Coloradans.<\/li><\/ul>\n\n\n\n
Background<\/strong><\/p>\n\n\n\n
Amid fears of property taxes growing faster than older Coloradans\u2019 incomes, Colorado voters approved Referendum A in the year 2000. In doing so, they amended the state constitution to give older Coloradans a property tax break. The policy, which eventually became known as the senior homestead property tax exemption, first became available in 2002. A few years later, voters approved Referendum E, which extended the favorable tax treatment to veterans with disabilities. The goal, according to the proponents, was to allow more people to remain in their homes.<\/p>\n\n\n\n
![\"\"](\"https:\/\/coloradofiscal.org\/wp-content\/uploads\/2019\/01\/Homestead-exemption.png\")
<\/figure>\n\n\n\nThe exemption applies to older Coloradans and veterans with disabilities who have lived in their homes for at least 10 years. The law exempts 50 percent of the first $200,000 of the house\u2019s value. For homes worth more than $200,000 in market value, the state reduces the value by $100,000 before calculating how much property tax is owed. For homes worth less than $200,000, only half of its market value is used to calculate property taxes. The exemption is not available for older Coloradans and veterans with disabilities who rent, or for who those who have owned their homes for less than 10 years. The 10-year rule also neglects to include people who may have lived in their home for more than 10 years but choose to move into a smaller home and have not yet lived there for the necessary 10-year period. <\/p>\n\n\n\n
The exemption saved the\naverage homeowner $575 and benefitted 245,802 older Coloradan households, along\nwith 5,858 veterans with disabilities, in 2017. That adds up to a little more\nthan 13 percent of all housing properties in Colorado. However, as with any tax\nexpenditure, there is a tradeoff in revenue.<\/p>\n\n\n\n
The\nrevenue lost from the Senior Homestead Exemption doesn\u2019t affect funding for\nlocal services because Colorado\u2019s constitution requires the state to reimburse\nlocal governments for the revenue they lose by exempting these homesteads from property\ntaxes. However, services and institutions funded primarily by state tax dollars\n\u2013 such as transportation, K-12 education, and higher education \u2013 are impacted.<\/p>\n\n\n\n
When the state budget faces\ntightening due to economic downturns, lawmakers have the power to adjust the\npercentage of the value of each home that is exempt and can even reduce the\nexemption to zero (for all but veteran households) as they did in six of the\nnine years from 2003-2011.<\/strong><\/p>\n\n\n\n
![\"\"](\"https:\/\/coloradofiscal.org\/wp-content\/uploads\/2019\/01\/Screen-Shot-2019-01-31-at-8.43.07-PM.png\")
<\/figure>\n\n\n\nWho receives the benefit of the homestead exemption?<\/strong><\/p>\n\n\n\n
Of the 484,613 households in Colorado with at least one older homeowner, just over half qualify for the current homestead exemption. 30 percent of households with at least one older Coloradan don’t own their homes, meaning they are unable to qualify. Another 19 percent are older homeowners who haven’t lived in their current residence for the 10 years needed to qualify for the current homestead exemption property tax break. <\/p>\n\n\n\n
![\"\"](\"https:\/\/coloradofiscal.org\/wp-content\/uploads\/2019\/01\/Screen-Shot-2019-01-31-at-8.47.15-PM.png\")
<\/figure><\/div>\n\n\n\nAdditionally, the homestead exemption is more likely to benefit older whites than older Coloradans of other races: 60 percent of older white households qualify for the exemption, but only 40 percent of older black households and just 21 percent of older Latinx households qualify. Taken as a whole, even though people of color make up more than 25 percent of the total population above age 65, they make up just 13.6 percent of total homestead exemption qualifiers. <\/p>\n\n\n\n
![\"\"](\"https:\/\/coloradofiscal.org\/wp-content\/uploads\/2019\/01\/Screen-Shot-2019-01-31-at-8.52.14-PM.png\")
<\/figure><\/div>\n\n\n\nOlder Latinx Coloradans are much less likely to own homes than older Coloradans who are white. A full 72 percent of older Latinx households don\u2019t own homes compared to only 18 percent of older white households. <\/p>\n\n\n\n
![\"\"](\"https:\/\/coloradofiscal.org\/wp-content\/uploads\/2019\/01\/Screen-Shot-2019-01-31-at-8.59.48-PM.png\")
<\/figure><\/div>\n\n\n\n![\"\"](\"https:\/\/coloradofiscal.org\/wp-content\/uploads\/2019\/01\/Screen-Shot-2019-01-31-at-9.01.42-PM.png\")
<\/figure><\/div>\n\n\n\nSimilar to the racial disparities described above, older\nColoradans who qualify for the homestead tax exemption are less likely to be\nexperiencing poverty than the total population over age 65. 32 percent of older\nhouseholds are above 500 percent of the federal poverty line and 35 percent of\nthose eligible for the exemption are above 500 percent of FPL. <\/p>\n\n\n\n
![\"\"](\"https:\/\/coloradofiscal.org\/wp-content\/uploads\/2019\/01\/Screen-Shot-2019-01-31-at-9.02.26-PM.png\")
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