Last updated: July 2014
I received an email with the following question:
I have seen various sources stating that property taxes in Arizona are 10%. Does that mean that on a $350,000 house, you would owe $35,000 a year in taxes? That doesn't make sense.
Well, you are correct. It doesn't make sense, but you aren't the only one who is confused about this issue.
Assessed Value vs. Market Value
The part that many people read over too quickly is that Arizona property taxes on owner-occupied residences are levied based on the Assessed Value, not current market value. In Maricopa County, where Phoenix and Scottsdale are located, the assessment ratio for owner-occupied residential property is 10 percent of Full Cash (market) Value. So if your home is valued at $200,000, you will be charged property tax based on the assessed value of $20,000.
So, how much will your property tax be? It's difficult to say, because that depends on where you live. Cities, schools, water districts, community colleges, bond issues--all these determine your specific tax rate. The average tax rate on homes in Arizona before exemptions and rebates is typically somewhere between 1.3% and 1.5% of market value. So, to answer your question, if your home is assessed at $200,000, and your property taxes were exactly 1.3%, then you'd be paying $2,600 per year in property tax.
Note: I have never found the assessed value of my home to be the same as the market price. My assessed values have always been lower than market, which means that if you use market price as an estimate, your tax will probably be lower than you thought when you actually get your bill.
Computing Arizona's Property TaxThe tax rate applicable to each parcel of property is the sum of the state, county, municipal, school, and special district rates. Let's say that the current tax rate on homes in Maricopa County is 1.3% of full cash value or 13% of assessed value. So, if your home is assessed with a Full Cash Value of $200,000, and your property tax rate was 1.3%, then you'd be paying $2,600 per year real estate tax on your home.
Here's the math:
$200,000 [Full Cash Value] x .1 [or 10%] = $20,000 [Assessed Value]
$20,000 [Assessed Value] x .13 [Tax Rate of 13%] = $2,600
$200,000 x .013 [or 1.3%] = $2,600
Keep in mind that the assumption of 13% of full cash value was for example purposes only. The actual tax rate in any particular year may be higher or may be lower. It may also vary from city to city within Maricopa County and may be different in other Arizona counties.
What is the Assessed Value of a home?
You can find the assessed value for a home in Maricopa County at the Maricopa County Assessor website.
I have never found the Full Cash Value of my home (which is the number that the Assessor uses to determine the Assessed Value) to be the same as the market price. My Full Cash Values have always been lower than market. Some of this may be due to timing of the real estate market on which the values are based, some of this may be due to rounding by the Assessor's office (and they always round in your favor). If you use the current market price as an estimate, your Arizona property tax will likely be lower when you actually get your bill.
Why is my home assessed at a different value than my neighbor's home?
Each year, the Assessor will send an updated assessment on the value of the home, upon which your property tax computation is based. The Assessor's Office utilizes 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. The valuation is determined by a computer analysis of the information gathered. If you disagree with information you receive from the Assessor, you may appeal. Beware of scams asking you to pay a fee to reduce your property taxes or lodge an appeal! Read more about property tax appeal scams.
How often are Arizona Property Taxes collected?The Maricopa County County Treasurer sends a semi-annual bill to the owner of the home, or to a party designated by the owner (like 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 County Treasurer, for the County in which you live, is the the entity that actually bills you for your Arizona Property taxes.
All tax information and rates presented here are subject to change without notice. I am not an attorney, nor am I a tax professional. Please consult your tax advisor with questions about your property taxes.