In 2022 voters took to the polls to vote on an expansion of Colorado’s popular Homestead Exemption to include Gold Star Spouses. Amendment E to section 3.5 of article X of the Colorado Constitution passed with nearly 88% of the vote. Colorado anticipates this Amendment will open up a tax exemption for 490 current Gold Star Spouses.[i] Now that you have some background, let’s get into what all this means to you.
What is the Homestead Exemption?
The Homestead Exemption is a discount on a primary residence’s property tax. It is important to note that this is only available for one property. The rule allows for 50% of your home value up to $200,000 to be exempted from taxation. So, if your primary residence is worth more than $200,000, then you get a $100,000 exemption. If your primary residence is worth less than $200,000, the exemption is 50% of your home’s value.[ii]
Example: Jill is a qualifying Gold Star Spouse with a primary residence last appraised by the state as being worth $500,000. Jill pays a 1% property tax on this property, equaling $5,000 a year. Now that she qualifies for the Homestead Act Jill can apply to have $100,000 (50% of the $200,000 allowable amount) taken off the home’s value for property tax purposes. As such she now pays 1% on $400,000, or $4,000, a 20% discount.
The actual amount saved by qualified individuals depends on where their primary residence is (while this is a state law, property tax is still assessed at different rates by your county).
This reduction in home value does not impact any other calculation, for instance it will not reduce the worth of your property for lending purposes.
How Do I Qualify?
If you qualify for more than one Homestead Exemption, only one is allowed. Therefore if you are already enjoying the exemption as a senior citizen you cannot apply for a second exemption under these new rules. Regardless of how you qualify the exemption is the same, so you only need to qualify once.[iii]
If you are a Gold Star surviving spouse who owned and resided in their property prior to or on January 1st of the year you are applying, you fit the criteria. The ownership requirements extends to Individual, Joint, and Life Estate ownership. The property must be classified by your county as residential. A Gold Star Spouse who has remarried is not eligible for the exemption.[iv]
There are some exceptions to this ownership rule, the most notable being that the Gold Star Spouse still owns the residence but is confined to a nursing home. For further exceptions and a more robust look at the rules, please refer to the Overview included under the “Gold Star Spouse Instructions 2023”. A link to this document has been included in the endnotes.
In order to apply, a Gold Star Spouse must download and fill out a two page application, and provide the full packet of information that includes documentation of your Gold Star status (Documentation can be the VA Benefits Summary letter or a letter from the Department of Defense).[v] Both the above mentioned instructions and the “Gold Star Spouse Form Application 2023” can be found at https://cdola.colorado.gov/property-taxation-forms , under the SENIOR AND DISABLED VETERANS heading, or links can be found in the endnotes.[vi] Upon completing this form, follow the instructions to submit to the Colorado Department of Military and Veteran Affairs, who will then check with the county your residence is located in. Once your eligibility and ownership are confirmed, you are not expected to apply again unless you move.
The deadline for this application is July 1st for tax year 2023.[vii]
About the Author: Josh Dunlop, CFP®, CDFA® is a financial professional and cofounder or NewMaker Financial, a firm dedicated to Financial Planning for women in transitional or vulnerable situations like widowhood. For more information about Josh visit NewMakerFinancial.com
*The information provided here is for educational purposes only, and is meant to be an introduction to the material. Gold Star Spouses are encouraged to read the full rules in the documents provided in the endnotes.
[ii] Form 15-DPT-AR SVE-007 22/22 , found in paragraph two of the Overview https://drive.google.com/file/d/1Mml0bAPOrzXf41eGHonVUHyZzvpTAJhY/view
[iii] Form 15-DPT-AR SVE-007 22/22 , found in final paragraph in Overview on Page 1
[iv] Form 15-DPT-AR SVE-007 22/22 , found on page 1 under Eligibility Requirements
[v] Form 15-DPT-AR SVE-007 22/22 , found on page 1 under Eligibility Requirements
[vii] Form 15-DPT-AR SVE-007 22/22 , found on page 1 under Making Application