Understanding Property Tax

Owning a home in Arizona has plenty of perks, including a relatively low property tax. In fact, the effective tax rate in Arizona is the 7th lowest in the nation. However, the method in which Maricopa County computes our tax rate tends to be a bit confusing. So let’s break it down!

Taxes on owner-occupied residences are levied based on the Limited Property Value (LPV). This is the assessed value. Taxes are not computed on the current market value, or Full Cash Value (FCV). The LPV is calculated at 10% of the FCV. So if your home is valued at $500,000, you will be charged property tax based on the assessed $50,000 amount.

Your home’s value is established as of January 1st of the previous year of your tax bill. In August of the following year, the year of your tax bill, the tax rates are set.

The tax rate itself can vary as it’s a compilation of state, county and municipal taxes as well as any special district rates such as bonds or school overrides. Too, the rate changes from year-to-year. For example purposes, let’s use the rate of 13% (of the LPV) in computing this example:

$500,000 Full Cash Value x 10%= $50,000 Limited Property Value
then,
$50,000 x 13% = $6,500

Property tax statements are sent out in September and the first half of the current year’s taxes aren’t due until October 1st. The second half of the current year’s taxes aren’t due until March 1st of the following year.

You may be wondering how the County Assessor’s office determines the value of your home. It’s done with a computer analysis of gathered information such as previous sales in the neighborhood, lot size, square footage and more. If you don’t agree with the valuation, you may file an appeal.