Understanding Arizona Property Taxes

Property taxes in Arizona is a very confusing topic, so I wanted to share a little incite into how the assessor gets to the amount you will be taxed each year and other valuable information for property owners to know.

Each year the assessor sends a notice detailing the full cash value (FCV) of your home. In that notice they will also depict the Limited Property Value (LPV) as well.

As of January 1st, 2024 you will have a lien placed on your property for 2024. Taxes are paid in ARREARS, meaning that when taxes are due on March 1, 2024 , you are actually paying for July 1st, 2023-Dec 31, 2023.  Your taxes, if paid semi-annually, are due on March 1st  and delinquent on May 1st, and then due on Oct 1st and delinquent November 1st.

If you disagree with the full cash value, you actually have remedies that can be taken. First go the assessor to argue the value with comparable sold properties, then if that doesn’t work you can go to the State Board of Equalization, then if that doesn’t work you can go to Tax Court.

Our property taxes are calculated based on the Assessed Value of your home using the Limited Property Value. They can never go up more than 5% per year, even if your full cash value increases much more than that. The Limited Property Value also, can never exceed the full cash value. This method takes away the extreme fluctuations in the market.

We then need to look at the  Assessed Value Ratio which is set by Arizona Law for all properties. Commercial property ( Class 1) is 18%, Vacant Land is15% ( Class 2), Residential owner occupied property is 10% ( Class 3), and Residential Income property ( Class 4) is 10%.

To get the Assessed Value of your home, multiply the Limited Property Value by the  Assessed Value Ratio. You will then take the Assessed Value x Tax Rate to get your Property Taxes for the year.

If you own a Residential Income Property ( Class 4). You MUST  file a Residential Rental Property Registration form with the county assessor. Did you know that if you have this property rented and you did not file this, the tenant can actually terminate the lease! This form notifies the assessor that this is an income producing property and removes the ‘Tax Reduction for State Aid to Education’ credit that is given to Owner Occupied Residential Properties (Class 3).  Owner occupied (class3) residential properties will see a rebate on their tax bill titled ‘State Aid to Education’, thus homeowners will pay a lower tax bill than other property classes.

I hope you found this helpful in understanding how Arizona assesses their taxes each year!