Important Real Property Tax Alert

As we approach the end of the year, we have seen many of our clients miss a big opportunity to save money by appealing real property classification and valuation decisions made by the County Assessor. Millions of dollars in unnecessary and inappropriate real property taxes will be paid by Arizona residents if effective action is not taken within the next few weeks.  

Many real property owners are under the mistaken belief that it is too late to challenge property tax values or classifications. However, you can still file an appeal with the Arizona Tax Court if the appeal is filed by December 15. In short, if you have not been involved in an administrative appeal, you have 15 days from the date of this letter to appeal your property’s assessed value and/or classification.

We have included below information which will help you determine whether an appeal is appropriate. In some cases we may help you find savings of a few thousand dollars, or, like one of our clients last year, savings of hundreds of thousands of dollars. Following are summaries of potential claims you may have.

• Excessive Valuation- To be successful, you must show that the value determined by the Assessor is higher than the market value of the property on the date of valuation (generally, January 1, 2010). Excessive valuation is a very common reality in a falling real estate market like Arizona.

• Incorrect Legal Classification- To be successful, you must show that the property’s legal classification is incorrect. For example, an agricultural classification is much more advantageous than that of an office building or residential classification. The wrong classification can have a huge effect on the amount of tax. Prospectively, we may be able to help you change the classification of your property.

• Tax Exemption- To be successful, you will need to show that the property qualifies for a tax exemption enumerated by the Arizona constitution. Most properties do not qualify for a tax exemption.

If you feel it is too late to pursue an appeal, start thinking about next year. Below is an article on how the real property tax system works in Arizona. The notices you receive at the beginning of next year will be the basis for computing your property tax assessment in 2012. For that reason, it is important to engage property tax counsel ahead of the issuance of the annual valuation and classification notices so that there is adequate time to evaluate whether an appeal is appropriate.

If you have questions about your property tax valuation or classification, please call us at 480-344-0908. We will help you understand your rights, the potential tax savings and help you take any appropriate action.

Very truly yours,

Yvonne Tagart
Davis Miles, PLLC

Rights to Appeal Valuation and/or Classification Assessments of Real Property

For most properties, in January of next year, the Maricopa County Assessor’s office will determine the value and classification of your real property for property tax assessments in 2012. In February, that office will send you a notice of value and classification of the property according to the property’s “current usage”, i.e. the “use to which property is put” on January 1, 2011.

You will have 60 days from the mailing date of the notice (until April) to request an administrative appeal within the County Assessor’s office. This appeal is informal and relatively inexpensive. Even though the likelihood of securing relief is low (it is an internal appeal after all), it also provides very good information regarding how the County Assessor came to its determinations. This information, coupled with our own is extremely helpful.

You will have 25 days from the date of the Assessor’s decision (usually in September) to request an administrative appeal with the Arizona State Board of Equalization (“SBOE”). The SBOE is made up of a three-member panel of former government and real estate professionals. Who sits on the panel is chosen at random. However, because the SBOE does not make the initial determination, the likelihood of success is greater than an appeal with the Assessor. If an SBOE appeal is not productive, then the only other option is an appeal to the Arizona Tax Court as explained above.

In summary, here are the typical deadlines relating to the calendar year tax valuation and classification appeals. Please note that these dates may differ, depending on the particular type of property you own.

(*- Taxpayers have 60 days from the mailing date of the County Assessor’s notice to request this appeal).

(**- Taxpayers have 25 days from the date of the Assessor’s decision to request an SBOE appeal.)