Every February, the state sends out its property tax assessments giving homeowners 60 days to appeal their assessed values, and subsequently their property taxes. This year, the annual assessment mailing will include a return-postage card that homeowners will specify whether their properties are class 3- Residential Owner Occupied homes or Class 4- Residential Rental.  Select that your home is class 3, that you occupy and live in your home as a primary rental and you will receive up to a $600 tax rebate. Select class 4, that the home is a rental property or 2nd home and you will forego the rebate and pay more taxes.  Mind you, these taxes go to social programs, education and other state-funded programs.

This year, these mailings will go out on February 25th and homeowners who are unaware of this change will see their tax bills go up and not know how to rectify the situation.  When this postcard comes in the mail PUT IT ASIDE SAFELY OR SEND IT BACK RIGHT AWAY!!

It used to be that every property declared as class 3 was assumed to be correct unless the homeowner stated otherwise.  Now, it’s the reverse- properties are assumed to be class 4 unless the homeowner declares it as class 3!

Originally this law passed a year ago as part of a package to provide $538M in tax breaks for businesses. Lawmakers believed that reducing business property taxes would shift the burden of making up these taxes to homeowners, so they altered the formula to calculate the rebate.  The law was intended to catch taxpayers who were claiming rebates for which they truly didn’t qualify.  This is the case of many homeowners who lived in their homes at some point, but had moved out of them and converted them to rental properties for various reasons.

BE AWARE: Homeowners may claim ONLY ONE rebate, regardless of the number of properties they own.  Vacation homes were previously eligible for the rebate, but that’s not the case any longer. These homes will be treated as though like rental or other income properties.

New legislation is in the works to limit the number of mailings that go out. For instance, if you purchase a property that was previously class 4 property and a buyer purchases as class 3, declaring at close of escrow that the home will be used for residential use, revisions would not require that a post card be sent back with a declaration. However, property owners who have differing property addresses and tax mailing addresses may continue to receive these cards that they send back.

The penalty for those caught abusing this law is 2 times the amount owed of the rebate that was claimed improperly. Given the maximum for this rebate is $600 per year, the maximum fine is $1200, not huge, but today, every little bit counts.

State realtors are working hard to repeal or amend this mandate and help homeowners who truly qualify for the rebate. The ultimate outcome is still to be decided but, for this year, homeowners need to be prepared to take this simple step to rightfully claim their property tax rebate.

Learn more about ARS 42-12052

Read additional press about this legislation