If you’re a homeowner in the state of Arizona, expect to have lower property tax bills. With its average property tax rate of 0.62%, it is one of the lowest in the country. This is in addition to a great year-round climate and affordable housing. These qualities make Arizona an attractive place to buy a home. Looking for a house there starts with finding a realtor that knows the place inside out. For example, you might be looking for some real estate in Prescott, AZ. With a small-town feel and friendliness, you can expect to find a nice house in this part of the state.
Property taxes are crucial for local and state governments. They use these funds to bankroll public projects like the construction of roads, schools, and fire departments and to provide other social services. Depending on where you live, your property taxes can be high. However, Arizona is a property tax-friendly state, meaning homeowners can only expect to pay a reasonable amount of it per year.

Assessed Value vs. Market Value

Buying or owning a house can be complicated if you don’t understand some of the nuances involved. The assessed value is the property value that the tax man uses to calculate how much a homeowner has to pay in property taxes. Market value is the price that a house would sell for under normal market conditions.
Knowing the difference between these two, as a homeowner, is crucial. Understanding that they often differ is key to ensuring that you always know how much you can expect your property tax to be.
The process of determining how much property taxes you’ll pay begins with a local tax assessor. This individual will consider all the necessary factors, including the property’s market valuation, assessment ratio, and “millage” rate. The assessment ratio is the factor that demonstrates a property’s assessed value in comparison to other such houses in the same municipality. A “mill” is the equivalent of $1 for every $1000 worth of assessed property value. All these parameters are crucial for the assessor to determine a property’s assessed value. This is the figure used to calculate how much property tax is to be paid.
The market value of a property is what a property would sell for, typically determined by market forces. Say a buyer and seller haggle over the price of a house and agree on $400 000, this would be the property’s market value. Of course, any prospective home buyer would hire an independent appraiser to gauge a house’s market value before making a purchasing decision.
Knowing the difference between the assessed value and market value helps you stay on top of your property tax issues.

Calculating Arizona Property Tax

The state, school district, municipality, and county all determine your final property tax rate. For example, if you own a house with an assessed value of $500 000 and a determined property tax rate of 1.3%, your property tax would be $6500.

Why Home Valuations May Differ

It might surprise you to know that your next-door neighbor pays a different rate of property tax compared to you. While both of your houses may be located within meters of each other, your property tax bills may not be the same.
Several factors account for this disparity. These are the usual things that determine a property’s value. They include;

i)Age: How long ago your house was built will determine its valuation, whether assessed or market value. This means that a house that’s decades old will likely have a lower tax bill.

ii) Size and Usable Space: The bigger the square footage, the more likely it is your property tax rate will be higher.

iii) Recent Home Purchases and Sales: The real estate market is very much dependent on location. If a house in your neighborhood recently sold for a certain amount, expect your property tax rate to be based on that valuation. It’s crucial to remember that being in the same general location doesn’t necessarily mean the same neighborhood. For example, if a house is a block away from yours but lies in a different subdivision or zone, its valuation may not be an accurate reflection of those in your neighborhood.

iv) Upgrades: A house that has undergone recent remodeling or had features like a swimming pool added to it will likely appreciate, meaning a higher property tax rate.

v) Economic Indicators: When there’s a general stagnation in the local economy, there may not be many people willing to buy a house. This may have the effect of lowering the general prices of property in an area. Lower property valuations mean lower tax bills.

All these factors are crucial to determining both the assessed and market values of a property. The local tax assessor relies on it as much as a private property appraiser.

How Often are Property Taxes Paid?

Usually, you pay property taxes yearly. The local assessor is only responsible for determining the amount of property tax to be paid. The county treasurer sends out the tax bill. However, most property taxes are paid indirectly through a mortgage lender. The lender simply adds this amount to your mortgage payments.

What Happens When You Fail to Pay Property Tax in Arizona?

Failure to pay property taxes can have consequences. After the county treasurer sends out your tax bill, you have up to 12 months to make payment. Otherwise, the county will create a certificate to document these unpaid taxes. These certificates are monetized by selling them to private individuals, much like how bearer bonds work. In this way, the county can continue to fund public projects without worrying about homeowners that default on their property taxes.
Ultimately, the amount of property tax you pay will depend on the kind of house you live in or want to own. Good home ownership begins with finding the right house. At Kelli Brindley Realtor, we’ve mastered the art of helping people find the right house in the Prescott area. Let us help you avoid the hassles associated with finding the right property. You can always reach us here: https://kellibrindley.com/prescott-properties/.

Kelli Brindley Realtor,
140 N. Montezuma Street Suite 201 Prescott AZ 86301,
(928) 273-5254

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