Sometime soon, meaning before March 1, the County Assessor of each county in Arizona will be mailing to all property owners the annual notice of the valuation of property for purposes of property tax assessment. It’s that letter you get every year that says “NOTICE OF VALUATION” at the top. It used to be a postcard, but now it’s usually a letter sized piece of paper a window envelope.
What does this notice mean? It has a bunch of numbers on it, most of which probably don’t mean anything to most people. The most important number on it is the one labeled “full cash value.” It’s supposed to be an approximation of the market value of the property. That’s the starting point for determining your property taxes for the following year. What can you do about it if you think the Assessor has set the full cash value of your property too high?
Nathan Hannah, attorney
Even though it is supposed to be sent before March 1, sometimes the notice of valuation is sent out late. The director of the Arizona Department of Revenue can extend the deadline for the Assessor to send the notice if there is a delay caused by an act of God, flood or fire. I recall that in past years the notice has been sent out late without there being any act of God, flood, or fire that I knew about. I don’t think there’s any penalty if the Assessor doesn’t meet the March 1 deadline, however.
Anyway, regardless of when the notice of valuation is sent, the purpose of it is to notify you, the property owner, of the valuation and classification that the Assessor intends to place on your property for purposes of property taxes for the following tax year. This means that the notice you receive this year is telling you what the valuation and classification of your property will be for 2017.
The property owner has sixty days from the date of the notice to ask the Assessor to review the valuation and/or classification of the property. The review is requested by filing a petition with the Assessor. If the property owner is asking for a review of the valuation, the petition must state the owner’s opinion of the full cash value of the property, and must also provide “substantial information that justifies that opinion of value,” in the words of the statute.
And what is “substantial information that justifies that opinion of value?” The owner must “state the method or methods of valuation on which the opinion is based” and provide additional information based on which method of valuation is being used to support the opinion of value. The three methods of valuation are the income approach, the market approach, and the cost approach.
Since most people use the market approach, I’ll discuss that one here. The others are less commonly used, mainly because the income approach doesn’t work unless property is income- producing, and the cost approach is rarely going to result in a value lower than the current value.
To use the market approach, the property owner must include in the petition either the full cash value of at least one comparable property in the same geographic area, or a sale price of the subject property. Be aware, however, that one comparable property is the minimum requirement for a petition to be considered by the Assessor. Don’t think that your petition is going to be successful if you find one comparable property that has a lower valuation. The Assessor is required by law to consider the valuation of other similar properties. Pointing to one outlier isn’t going to get the Assessor to lower the valuation of your property.
The Assessor has until August 15 to rule on all petitions that are filed. If the property owner is not satisfied with the Assessor’s decision, the property owner can appeal to the county Board of Equalization, then the State Board of Equalization. The property owner also has the option, either after or instead of appealing to the Board of Equalization, to file an appeal in either the Superior Court or the Arizona Tax Court. There are, of course, deadlines that must be met along the way in this process.
In addition to the deadlines, one other thing to look out for if you appeal the Assessor’s decision is that if the director of the Department of Revenue thinks the Board of Equalization set the valuation of the property too low, the director can appeal that decision to the Superior Court. There are a lot more procedural details that I’m leaving out, as you might expect. The goal of the process is to produce, by the end of the year (except for cases where there is an appeal to court), a final valuation of all properties subject to taxation, so that the various taxing jurisdictions can levy and collect taxes next year based on the valuations determined this year.
Don’t be intimidated by the process. When you receive the notice of valuation from the Assessor, if you think the full cash value shown on it for your property is really too high, come talk to me about filing a petition for review.
Nathan B. Hannah is a Shareholder in the Tucson office, and practices in the areas of estate planning and administration, real estate, and commercial transactions. He is also a noted blogger, and you can find more of his articles on his private blog,
Contact Attorney Hannah: nhannah@dmyl.com or 520/ 322-5000
This communication is designed to bring legal developments of interest to the attention of our clients and others. It should not be relied upon as a substitute for specific legal advice in a particular matter. For further information on any of the subjects discussed, or for legal advice in connection with any particular matter, please contact us.
