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Property tax

Property tax. January 13, 2012. Property Subject to Taxation. Real property – land and improvements Personal property – everything not included in real property . Classes of Property. Class One – Industrial & Commercial Class Two – Agricultural Class Three – Residential

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Property tax

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  1. Property tax January 13, 2012

  2. Property Subject to Taxation • Real property – land and improvements • Personal property – everything not included in real property

  3. Classes of Property • Class One – Industrial & Commercial • Class Two – Agricultural • Class Three – Residential • Class Four – Residential Rental

  4. Classes of Property (cont) • Class Five – Railroads and Airlines • Class Six – Historic, foreign trade zones, enterprise zones • Class Seven – Commercial historic • Class Eight – Rental historic • Class Nine – Improvements located on fed, state, county or city property

  5. Breakdown of classes in Maricopa County 2008 • Class 1 – 34% • Class 2 – 7% • Class 3 - 50% • Class 4 - 7%

  6. Breakdown of classes in Maricopa County in 2011 • Class 1 – 36% • Class 2 - 6% • Class 3 – 47% • Class 4 – 9%

  7. Assessment Ratios • Class 1 – 20% • Class 2 – 16% • Class 3 – 10% • Class 4 – 10% • Class 5 – 15% • Class 6 – 5% • Class 7 – 20% • Class 8 – 10% • Class 9 – 1%

  8. Example Residential Property Full cash value – $150,000 Net assessed value would be $15,000

  9. Decreases to Assessment Ratios Class one – 2005 – 25% 2011 – 20% Class five – 2005- 21% 2011 – 15%

  10. Tax Base • Primary (limited) values • Secondary (full cash) values

  11. Primary Values • Limited property value • Value of preceding year plus the greater of either -ten percent of that value - 25% of difference between full cash value current year and limited value in the preceding year • Cannot exceed secondary value

  12. Secondary Values • Market value • No limit to the increase from prior year

  13. Valuation methods • Centrally assessed • Locally assessed

  14. Levies • Levy – the amount of money raised against property in a district • Primary – funds operations • Secondary – funds debt service and special districts

  15. Primary Levies • Counties, cities and community college districts are restricted by a levy limit • School districts are not limited by the constitution, but are limited by the legislature each year

  16. Levy limit – counties, cities, etc • Levy limit calculated off a base year of 1979 and reset in 2006 • Levy limit increases each year by 2% plus new construction

  17. Example – City of Glendale Maximum allow levy 2010 4,701,477 Multiplied by 1.02 4,795,507 Net assessed value 2010 12,801,750 Net assessed value 2011 13,070,873 Max allowable tax rate 4,795,507/12,801,570 .3746 Max levy limit for 2011 13070873 x .3746 4,896,349 Actual primary levy 2,943,561 Under levy limit 1,952,788 Tax rate .2252

  18. Additional limits on primary • Class 3 property – combined primary tax from all jurisdictions cannot exceed 1% of primary value • In cases where it exceeds that amount, the school district taxes are reduced and the state provides additional aid to that school district

  19. Homeowners Rebate • State pays 35% of primary property tax for class 3 property • Known as the “homeowners rebate” • Homeowners pay lower primary property tax rate than other property owners

  20. Calculation of Property Tax Primary Assessed value - $150,000 Net assessed value - $15,000 Secondary Assessed value - $200,000 Net assessed value - $20,000 Primary property tax rate – 9.8432 Secondary property tax rate – 4.3214

  21. Calculation of Property Tax (cont) Primary - 15,000 x 9.8432/100 = 1,476.48 Less homeowners rebate 516.77 Net primary – 959.71 Secondary - 20,000 x 4.3214/100 = 864.28 Total – 1,8233.99

  22. Where your money goes

  23. Important Dates • February 10 – Values released • Third Monday in August – property tax rates set • October 1 – First half taxes due • December 31 – Full year due • March 1 – Second half taxes due • September 30 – cutoff for new construction • February – valuation notices sent

  24. Appeals of Valuation • Owner may appeal their valuation • Must file an appeal within 60 days of assessor notice • You can either meet with an assessor of file written evidence to support your claim • If appeal is denied, can appeal to the State Board of Equalization

  25. Budgeting • Budget to the rate • Budget to the levy

  26. Budget to the rate • Primary property tax rate .22 • Secondary property tax rate 1.37 • Total rate – 1.59 • Good times - $33.7 million • Tough times - $20.8 million

  27. Budget to the levy • Primary levy – $3.6 million • Secondary levy - $30.1 million • Good times rate – 1.59 • Tough times rate – 2.57

  28. Decreased property valuations Maricopa County – 2008 • Primary valuation - $44,881,602,698 • Secondary valuation - $58,303,635,287 Maricopa County – 2011 • Primary valuation - $38,491,699,290 • Secondary valuation - $38,760,296,498 Decrease of 14% and 34% respectively

  29. Future declines • Predicted 14% decline for Fy12-13 • In Glendale we are assuming a further 7% decline for FY13-14

  30. Legislation • Business pay less • Other changes

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