Colorado's constitution chooses the valuation method for one class of property and leaves the rest to the statute. Residential real property is valued "solely by the market approach to appraisal," which means comparable sales and nothing else. Every other kind of real property, from an office tower to a distribution warehouse to a hotel, is valued by "appropriate consideration of the cost approach, the market approach, and the income approach."
For an owner, the method decides which arguments are available. An apartment owner cannot argue from an operating statement the way an office owner can. An office owner whose building stood empty on January 1 has an argument that a sales-only valuation never reaches. And a hotel with long-stay guests has part of its building in each class.
Sources: the Colorado Constitution, article X; Colorado Revised Statutes Title 39 (2025); the Division of Property Taxation's Assessors' Reference Library; and Board of Assessment Appeals decisions issued in August and September 2026. Constitutional and statutory language is quoted, not paraphrased. Board decisions are final agency orders that do not bind other cases, but they show how the Board is applying the statute.
The rule, and where it comes from
The sentence that matters is in the Taxpayer's Bill of Rights, adopted in 1992. Article X, section 20(8)(c) of the Colorado Constitution requires actual value to be stated on every tax bill and valuation notice "and, for residential real property, determined solely by the market approach to appraisal." An older clause in the same article, section 3(1)(a), allowed residential property to be valued by the cost and market approaches. TABOR narrowed that to sales alone, and the statute follows it: "The actual value of residential real property shall be determined solely by consideration of the market approach to appraisal." C.R.S. § 39-1-103(5)(a).
The same subsection sets the rule for everything else. Commercial and industrial property is valued at "that value determined by appropriate consideration of the cost approach, the market approach, and the income approach to appraisal," and the assessor "shall consider and document all elements of such approaches that are applicable prior to a determination of actual value." Both classes are valued as the fee simple estate. What changes between them is the evidence allowed to reach the number.
Residential covers more than houses
Owners who think of residential as single-family homes are often surprised by how much of the market it covers. The statute defines residential improvements as "a building, or that portion of a building, designed for use predominantly as a place of residency by a person, a family, or families" (C.R.S. § 39-1-102(14.3)). There is no unit limit. A 400-unit garden complex, a downtown high-rise and a duplex are all residential, and all of them are valued on sales. The definition also reaches nursing homes "regardless of a resident's length of stay." Hotels and motels are carved out (C.R.S. § 39-1-102(14.5)) and stay commercial.
The class also sets the rate. In 2026 residential property is assessed at 7.05% of actual value for school levies and 6.8% for other local levies. Commercial property, lodging included, is assessed at 25%. On the same dollar of value, a commercial owner carries roughly three and a half times the assessed value of a residential owner.
Mixed-use buildings are split. Where a building holds dwelling units and anything else, "the actual value of each portion of the improvement shall be determined by application of the appropriate approaches to appraisal," and the land is allocated between the classes in proportion to the value of each portion (C.R.S. § 39-1-103(9)(a)). Apartments over ground-floor retail are two valuations: the apartments on sales, the retail on all three approaches, each at its own rate.
Rent still counts for apartments, but only as a multiplier
Because the income approach is off the table for residential property, a county cannot capitalize an apartment building's net operating income, and neither can the owner. Rent gets in through one door. The statute says "a gross rent multiplier may be considered as a unit of comparison within the market approach to appraisal." A gross rent multiplier is a ratio taken from sales: the price a comparable building sold for, divided by its rent. Applied to the subject's rent, it is still a sales comparison.
Investors used to underwriting on net income need to plan around that. Rising insurance, payroll and utility costs do not get their own line in a residential valuation. They count only to the extent buyers priced them into the sales, so the case for an apartment building is built from sales: the right ones, adjusted for time, location, size and quality, and checked against the multipliers those same sales produce.
Time is the adjustment counties most often get wrong. Colorado values every property as of one appraisal date, June 30 of the year before the reappraisal year, using sales from the 18 months before it and, where sales are thin, earlier sales in six-month steps up to five years. For 2027 the appraisal date is June 30, 2026. A sale from 2024 or early 2025 has to be adjusted to that date, and the Board treats the adjustment as mandatory.
A September 2026 decision shows what that one adjustment can be worth. A 194-unit Class A apartment complex in Durango, built in 2018, sold in December 2021 for $79.5 million. La Plata County valued it at $79.1 million for 2025, leaning on the purchase price, and its appraiser concluded it was worth more. The owner's appraiser trended the 2021 sale forward to the June 30, 2024 appraisal date, up modestly for two quarters and then down about 8% a year, and supported the result with sales from across the state adjusted for location, because Durango had only one relevant sale. The county offered no multifamily time adjustment, only a single-family trend. The Board of Assessment Appeals described the adjustment as one "that is required by statute" and cut the value to $69.0 million, a reduction of almost 13%, entirely inside the market approach.
Commercial property: three approaches and market assumptions
For commercial property the assessor has to consider all three approaches and document the elements that apply. For leased buildings the income approach usually carries the most weight. For new or special-purpose buildings the cost approach matters more, and for owner-occupied buildings the sales often lead. Whatever the mix, the Assessors' Reference Library, which binds every county assessor, frames the target this way: "Market value of the fee simple estate should reflect market assumptions, including market rent, market expenses, and market occupancy."
Market occupancy is where a stabilized building and an empty one part ways. A fully leased office building is valued with a market vacancy allowance rather than its actual occupancy, which protects owners of well-leased buildings as much as it helps counties. A building that is new or mostly vacant on January 1 is a different asset. A buyer would pay what the building will be worth once it is leased, less what it will cost to get there.
Vacant and new buildings need a lease-up deduction
Lease-up costs are what the buyer of an empty building spends before it produces stabilized income: the rent lost while space is marketed and absorbed, leasing commissions, tenant improvement allowances and rent concessions. A value that ignores them treats an empty building as if it were already full.
In six cases decided in August 2026, Adams County argued that Colorado law does not allow the deduction. Its position was that the statute values the fee simple estate, and that deducting lease-up costs values something less, closer to a landlord's leased fee interest. The Board of Assessment Appeals rejected the argument each time: "a deduction for lease-up expenses is consistent with valuing the fee simple estate and is not the same as a leased fee interest." The Board relied on the Colorado Supreme Court's reasoning in City and County of Denver v. Regis Jesuit Holding, Inc. that "to ignore the effect of the lease on the judgment of a purchaser ... is to ignore the mandate that the property is to be valued at its actual value," and on the International Association of Assessing Officers' 2019 paper on fee simple, which says an appraiser can value the fee simple estate "assuming leases in-place, market rents, or a lease-up period."
The Brighton decision shows how the deduction is built. A 546,000-square-foot warehouse was finished in January 2023 with no tenants. The Board set its stabilized value from the evidence it found credible, then deducted a 12-month lease-up: leasing commissions of $0.34 per square foot, a tenant improvement allowance of $10.00 and lost income of $5.76, a total of $16.10 per square foot, or about $8.8 million. It rejected the owner's discounted cash flow model for the same calculation. The 2023 value fell from $63.6 million to $44.1 million.
The other five decisions show the limit. They involved five new distribution warehouses in Thornton, all vacant on January 1, 2024. The Board called the lease-up deduction "an integral part of the value conclusion" and allowed it on every building, but it took the deduction from the county's stabilized values, which it found more credible than the owner's. Four of the five still came out above the values the county had already set, and the fifth moved by about $18,000. A building that is not stabilized on the assessment date needs the deduction, and the deduction is only worth something when it comes off a stabilized value the Board believes.
Two practical points follow. The building's condition is fixed as of January 1, while the market it is valued in is fixed as of the June 30 appraisal date, so a building that is empty on January 1, 2027 is valued as an empty building in the June 30, 2026 market. And the deduction belongs to the income approach. A new apartment building in lease-up is residential, so any lease-up discount has to be shown through sales.
Hotels: the 30-day rule puts part of the building in the residential class
Hotels are commercial, but not every room night is. The Assessors' Reference Library treats rooms "leased or rented for thirty consecutive days or longer by the same person or business entity" as residential use and allocates the property between the classes by the share of room revenue, or room nights, from those stays. Corporate housing, crew contracts, relocation blocks and travel-nurse programs all count. The long-stay share is assessed at the residential rate instead of 25% and, as residential property, is valued on the market approach. The documentation is the case: folios, contracts and the revenue split.
SVA's Colorado guide works the numbers for a $40 million hotel with 20% of its room revenue from long stays. The assessed value falls from $10.0 million to about $8.5 million, roughly $146,000 a year at 100 mills.
What to check on a 2027 notice
- The class before the value. Classification is a separate question on a Colorado protest. Check that the county has the building, or each part of it, in the right class, including the residential share of a hotel with long-stay business.
- For apartments, the sales. Comparable sales from January 1, 2025 through June 30, 2026, reaching further back only if sales are thin, each adjusted to June 30, 2026, with gross rent multipliers taken from those same sales. Sales from other markets need a location adjustment the market supports.
- For commercial property, market terms. Market rent, market vacancy and market expenses as of June 30, 2026, and a cost approach for newer buildings.
- For a building that was not stabilized on January 1, 2027, the lease-up. The absorption period, commissions, tenant improvements and rent concessions, each supported by market evidence and taken off a stabilized value that will hold up.
- The dates. Notices of value mail May 1, 2027. Real property protests are due June 1, 2027, a week earlier than in past cycles.