Anyone who owns property in Arizona is subjected to paying property taxes. But many people don’t understand how these taxes are determined. It’s imperative that anyone who has to pay these taxes has at least a basic understanding of what they mean.
There are several factors that go into a property tax bill. The county you live in, the type of property, and the tax year are some of these.
Full cash value versus limited property value
One thing to remember is that the property tax rate you pay isn’t based on the full cash value of the property. That value means what the property is worth on the market. Instead, it’s based on the limited property value. That value is determined by the previous year’s limited property value, but there’s another formula to know if the property is new construction.
The limited property value is set by Rule B for new construction. It takes the average limited property value and compares it to the full cash value of already established properties of the same classification within the county that are similar to the new construction. For the 2021 tax year in Maricopa county, the ratios are:
- Residential: 68%
- Commercial: 72%
- Vacant land: 57%
Once the limited property value is determined, the millage, or tax rate, is applied to that value. If there weren’t any previous property taxes for the property, it’s possible to appeal the Rule B application in that first year only.
Property tax bills can be incorrect
There are times when the tax liability for a property isn’t correct. Filing an appeal can help to get things corrected. You should do this quickly and ensure that you have everything set up correctly when you file. There are very specific time limits for appealing property taxes.
For example, you only have 25 days from the mailing date of a supplemental notice to file an administrative appeal. You’d have to file a lawsuit if you miss that deadline, but you only have until December 15 of the mailing year to do this. A real estate attorney can help you determine your options when something is amiss with your taxes.