In 2014, Arizona?s Proposition 117 went into effect and established a 5% limit on property valuations. Since that time, many homeowners have grown accustomed to receiving their notices of value from their county assessors without expecting much of a difference in their assessed property values. If you have recently received a supplemental notice of value, however, there may be an opportunity to lower your property taxes through a ?Rule B? valuation. If you have received a supplemental notice of value for the 2021 tax year, you will want to know: Can I use ?Rule B? to reduce my property taxes?
Why Did I Get a Supplemental Notice?
The law requires the county assessor to issue a “Supplemental Notice” if there is a change to your property after the original Notice of Value was mailed. Supplemental notices are based on one or more of the following changes to your property:
- New construction
- Destruction or demolition of the property
- An addition to the property
- A deletion from the property
- A split, consolidation, or subdivision of a property; or
- A change in the use of the property
When one or more of these events occurs, a ?Rule B? valuation is triggered.
What is a ?Rule B? Valuation?
Arizona uses two separate values for each property parcel: Full Cash Value (FCV) and Limited Property Value (LPV).
“Full cash value” (FCV) ?for property tax purposes, means the value determined as prescribed by statute. If a statutory method is not prescribed, full cash value is synonymous with market value, which means the estimate of value that is derived annually by using standard appraisal methods and techniques.?
Limited property value (LPV) is a value calculated according to a statutory formula that was created to reduce the effect of inflation. For property taxation purposes, it is ?the limited property value of the property in the preceding valuation year plus five percent of that value. LPV cannot be more than FCV, and the value is calculated for each individual property. In most instances, FCV and LPV are going to be the same with certain exceptions.
The ?Rule B? Ratio
The LPV establishes a “Rule B” ratio. Rule B ratios vary by county, by the class of property, and by tax year. A property owner’s ratio is determined by contrasting the average LPV to the average FCV for like or similar properties in the same classification throughout the county.? If a property owner can successfully appeal the notice of value for FCV and reduce the assessed amount, they may be able to lower their tax liability.
Appealing a Supplemental Notice of Assessed Value
If you have received a supplemental notice of assessed value for 2021, you only have 25 days to request an administrative appeal. However, you may also file suit in court by December 15, 2020. Before filing, you should consult with an experienced Arizona real estate attorney who can help you review your notice and prepare for your case.
Laura B. Bramnick is an experienced Arizona real estate attorney who can help you manage all aspects of your Arizona real estate matter. If you are seeking an exceptional, client-driven real estate lawyer in Scottsdale, Phoenix, Sedona, and throughout the State of Arizona, contact Laura B. Bramnick to schedule your consultation.