John R. Hastings      Associate Broker Licensed in Arizona
Real Estate Property Taxes
Arizona Real Estate Property Tax – An Easy Overview

In Arizona property taxes are “ad valorem” (based on value) and we pay our real estate property taxes in arrears.  The tax
year runs concurrent with the calendar year beginning on January 1 and ending on December 31.  Tax bills are mailed to
property owners each September and are paid in two installments – the first half being due on October 1 (becoming
delinquent after November 1) and the second half being due the following March 1 (becoming delinquent after May 1).  
Because we pay “in arrears” the tax bill mailed in September is for that current calendar year, and it is easy to see that
the first half, which you pay in October, is really for the first half of the year from January 1 through June 30.  The second
half, which you pay the following calendar year in March or April, covers your tax liability for July 1 through December
31.  Special Exemptions that reduce property taxes are available for qualifing widowed persons and for fully disabled
persons - see note at bottom of this page.

Between January 1 - March 1 each year the County Assessor mails property owners a Notice of Valuation which shows
the value of the property as it is being used for that current year (used on the bill to be mailed six months later in
September) as well as the value that will be used for the following year.  Property owners who disagree with the
Assessors valuation for the following year can appeal that valuation within 60 days of the notice mailing date.  The
valuation for the current year cannot be appealed as that window of opportunity closed 60 days after that notice was
mailed the prior year.  This year (in 2009) the deadline for appeals of the 2010 value was April 14, 2009.

Taxes are based on two Values:  the first being “Full Cash Value” (FCV) which is used to determine the tax due for
“Secondary Taxes” (voter approved bonds and levies) and the second being “Limited Property Value” (LPV) which is used
to determine the “Primary Taxes” (basic expenses of government and schools).  The initial values are established when
property is sold and purchased.  Future values are based on the Assessor’s annual opinion of value.  The FCV is supposed
to reflect the actual “fair market value” of the property, and the LPV is calculated according to a statutory formula
designed to reduce the effect of inflation on property taxes.  The LPV cannot exceed the FCV.

Actual taxes to be paid are calculated by applying the Tax Rate established by the taxing authorities to the Assessed
Value of the property and is expressed as a dollar rate per $100 of Assessed Value.  The Assessed Value ratio for
residential property is 10% of the FCV and LPV.  The ratio for vacant land is 16% and the ratio for commercial property is
24%.

Below you can see a chart showing the history of tax valuations, rates and liabilities for a particular property in 2005 –
2009 and the assessor’s valuation of FCV and LPV for 2010 as well as a percentage of change from year to year.  As you
will see the FCV grew rapidly from 2005 – 2008 but is shown to fall for 2009 and 2010.  You will also see that the LPV did
not grow nearly as fast as the FCV (as was intended to dampen the impact of inflation).
















This year (2009) the Assessor mailed out Notices of Valuation showing large reductions in the FCV and LPC for almost all
properties in the County, which will likely result in practically no one filing appeals.  Does this mean the taxes due will
go down in 2010?  In my opinion, probably not (see the chart above and observe the relationship of the Tax Rate per $100
dropping as the FCV and LPV rise).  My expectation is that with overall values decreasing the “Tax Rate” will probably
increase, and for a very simple reason - It is important to understand the sequence of events that drive the “Tax Rate”
each year:
1.        First, the County Assessor determines the total value of all property in the county;
2.        Next the agencies and tax districts funded by these taxes determine their annual operating budgets for
the following year;
3.        Then the total dollars needed to operate are allocated amongst properties via the “Tax Rate” per $100 of
assessed value.
4.        In the end, the total revenue needed will be collected from the property taxes levied.

An over-simplified explanation would be this:  If the county was comprised of 100 homes with a total value of $10,000,000
and the revenue needed was $68,529 the combined tax rate would be $6.8529 per $100 of assessed value.  Then, the
following year, if the values of all the property dropped 25% to a new total of $7,500,000 but the revenue needed remained
at $68,529 the combined tax rate would need to increase to $9.1372 per $100 of assessed value to collect the revenues
need to operate the government, schools and fund the tax district’s fire departments, libraries and bonds.

The information on this page is intended to provide a simple easy to understand overview of how property taxes work in
Arizona, specifically in Mohave County.  For a more detailed explanation as written by the County Assessor (this is a
large PDF file that requires Adobe Acrobat Reader and will take a couple minutes to load)  Click Here.

SPECIAL EXEMPTIONS - Special Exemptions exist for certain Qualifing Widowed Persons and for Fully Disabled
Persons - Click Here for more information.

APPEALS - Anyone wishing to appeal the County Assessor's valuation of their property Click Here to be directed to
County Assessor's web site for directions and the proper forms.