Arizona homeowners pay property tax on the assessed value of taxable property in the state, with an average rate of .845 percent, well below the national average of 1.211 percent. The amount of property tax applicable to each parcel of property equals the sum of the state, county, municipal, school, and special district rates, which vary from city to city and from county to county.
Assessed Value vs. Market Value
Many Arizona property and would-be property owners mistakenly calculate their expected tax as a straight 10 percent of value, thinking they would owe $35,000 a year in taxes on a $350,000 house. In actuality, Arizona property taxes on owner-occupied residences are levied based on the limited property value (LPV) or assessed value. You do not pay your real estate taxes based on the full cash value (FCV) or current market value of your property. In Maricopa County, where Phoenix and Scottsdale are located, the assessment ratio for an owner-occupied residential property is 10 percent.
The LPV is usually less than the FCV, and by law, it can never be higher. So, if your home's LPV is established at $200,000, you pay property tax based on the assessed value of $20,000. A 2012 law also restricts LPV increases to 5 percent or less from year to year, meaning property taxes don't always keep pace with increasing property values.
Arizona's Property Tax
Cities, schools, water districts, community colleges, and bond issues all contribute to determining your specific tax rate. The average tax rate on homes in Arizona before exemptions and rebates usually lands between $12 and $13 per $100 of assessed value (2016). It follows, then, that if your Phoenix home's LPV is established at $200,000, with an assessed value of $20,000, and your property taxes were exactly $13 per $100 of assessed value, you would pay $2,600 per year in property tax.
Keep in mind that the assumption of 13 percent of assessed value was for example purposes only. The actual tax rate in any particular year may be higher or lower. It may also vary from city to city within Maricopa County and may be different there than in other Arizona counties.
Primary tax rates fund government entities while secondary tax rates fund special districts and bond issues. For owner-occupied homes, the total primary tax rate cannot exceed 1 percent of the limited value of the property. The state effectively provides a tax break to owners of properties that exceed that threshold, lowering the homeowner's school district tax to compensate, then covering the difference. Homes with occupants other than the owner, for example, rental properties or those held as vacation or second homes, do not qualify for this reduction.
You can find the assessed value for a home in Maricopa County at the Maricopa County assessor's website.
The full cash value, the number the assessor uses to determine the assessed value, rarely reaches the market price. This may reflect the timing of the real estate market on which the values are based or rounding by the assessor's office (and they always round in your favor). If you use the current market price of your home as an estimate, your Arizona property tax will likely be lower when you actually get your bill.
Each year, the assessor sends an updated assessment of the value of the home, which determines your property tax. The assessor's office uses a combination of information, including previous sales in the neighborhood, distance from major intersections or areas zoned differently, topography, view, livable square footage, lot size and components, and more. A computer analyzes the gathered information to establish your valuation. If you disagree with the information you receive from the assessor, you may appeal within 60 days of the date the assessor mailed the notice.
But beware of scams asking you to pay a fee to reduce your property taxes or lodge an appeal.
Property Tax Collections
The Maricopa County treasurer sends a semi-annual bill to the owner of the home or to a party designated by the owner (such as a mortgage company if you have a monthly impound for your Arizona real estate tax). Remember, the assessor determines the value of the property and the treasurer bills you for your Arizona property taxes.
Tax rates and rules presented here are for information only and subject to change without notice. Please consult your tax advisor with specific questions about your property taxes.