Over the next couple of days, home owners across Maricopa County will be getting their property tax assessment notices in the mail.
It’s quite likely (almost a certainty) that you’ll see the assessed value of your home has declined since your last notice.
That’s because, of course, generally speaking, home prices in Maricopa County have declined – sometimes significantly.
Of note, and this is important folks, these notices are NOT tax bills, and your 2009 property taxes will not be lower because of this lower assessment.
“Well that sounds like a load of crap Jay! My home value declines and my property taxes don’t?!?” you may be thinking.
That’s because the assessment you are about to receive is for your 2010 taxes. You got your assessment for your current property taxes some 18 or so months ago.
Yes, the wheels of government turn slowly, and that includes the county tax assessors office. They lag about 18 months because there is time built in to appeal the assessment and because let’s face it, there are a lot of homes in Maricopa County. Gathering, assimilating, compiling and evaluating that much data takes time.
Before you get too bent out of shape remember this. A couple of years ago when Phoenix home values were exploding, you were paying taxes based on a lower value assessment from the previous 18 months. It works both ways…
Another thing to note. We get calls ALL the time after these notices come out from people who don’t think the assessed value equates to market value. They don’t. These aren’t appraisals. They aren’t usually even “drive bys”. Odds are no one in the assessors office has ever seen your home. Despite being called the “Full Cash Value” (FCV) this number does not reflect the true market value of your home. The valuations are determined based on sales data and statistics. Even so, they are fairly close to actual market value in some cases, but should never be used to determine the true market value of your home.
Here’s a chart courtesy of the Maricopa County Tax Assessor comparing median Full Cash Values between 2009 and 2010 assessments for various Phoenix area cities. The FCV numbers won’t match up with sales values, but the trends will be pretty darn close.Read it and weep.
Edited 2/24 changing references to “Fair Cash Value” to “Full Cash Value” because I’m an idiot and apparently had “fair” on the brain. Thanks Zoot!
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{ 14 comments… read them below or add one }
thank you r the up date
You can actually lower your property taxes. Contact the Assessor’s office to find out how you can have your value lowered.
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I am really surprised to hear that even if the value of the house goes down, the tax won’t. All should unite and protect against this greedy act of country Assessor’s office.
qqqq
Doesn’t FCV stand for Full Cash Value, and not Fair Cash Value?
Zoot – You are absolutely correct! I’ve edited the post. I’m not real sure what I was thinking when I typed “fair”…
The value of your home doesn’t determine what you taxes are going to be and a lower home value doesn’t mean lower taxes even if it is for 2010. Taxes for everyone went up during the boom because of spending by the government, not because of home values. Taxes will go down in 2010 because government spending will go down. The value of your home determines your *share* of the spending that happens. So, if the value of your house goes down chances are all house values went down and therefor, your share of the pie is unchanged. The only way to have a lower tax bill is for the overall budget of the government to be lower and the only way to get that lower is to demand that the government cut spending.
Jay
It was an excellent article in spite of the “Fair vs. Full” typo. But in Maricopa County, aren’t there are two values that we need to consider when considering the property tax aspect? The Full Cash Value (FCV) may go down (as shown by the above table); but the Limited Property Value (LPV) will always increased. And the total property tax is based on both values. I don’t know what the tax rate is on either value, but is it possible that our total 2010 tax bill doesn’t decrease, in spite of the FCV decreasing?
Sheldon
I didn’t see your comment before I wrote mine (above), so you have answered my questions to Jay. Very well stated. Thanks.
..
I honestly don’t know much about the FCV and the LPV and how the related to each other and to how much you pay. But I found out the hard way that property taxes don’t have anything to do with the assessed value of your house. I guess as long as the assessments of the houses in your neighborhood or city or however they divide it up are fair then I’m paying the right amount. To me, for the number that gets mailed to you to have meaning you really need to be able to compare your 4 bedroom/2 bath single story to the 5/3 two story across the street. In theory the bigger house is worth more and pays more in property taxes. But since we are not told how the assessments are done or what the assessments of the houses around us are we have no idea if we are paying our fair share. Sure, we can look them up online and try to figure it all out but who has the time? I live in Gilbert and the tax assessment for my house went up by 33% in one year and it was because of a PKID . . . I’m still trying to understand that. But basically the neighborhood voted for improvements and so everyone in the neighborhood has to pay (I just recently purchased the house but noticed the jump during my research).
But I wrote here mainly to try and squash the *myth* that if your property value goes down so does your property taxes!
It is sad to see the drops in house values on that chart-but it seems your area hasn’t been hit too hard; hopefully this will all get better soon!
@Jim @Scott – that’s a 22% decline (average) in FCV – in one year. True market values are down in Phoenix (generally speaking) almost 50% off the peak of 2005/06. The Phoenix real estate market is one of the hardest hit in the country. Of course we had an unprecedented run up, but still “not too bad” and “hasn’t been hit too hard” wouldn’t be my choice of words for the Phoenix market. You should drive through some neighborhoods where 60% of the listings are foreclosures or short sales, or see the look on a homeowners face when you tell them the new home they bought in 2006 for $280K should be listed for $105K.
@Sheldon – you’re correct in that there is no easy way to compare assessments within a given area (short of searching public record, which would be excruciating). As someone who has looked at a LOT of assessed values, I can say that they generally are “fair” (fair as in homes that have a higher market value almost always have a higher assessed value).
If, and it’s a big if I should have clarified in the post, all things are held equal, when the FCV is lowered, your overall property tax will be reduced. *IF* all things are held equal (particularly the formulas and tax rates). BUT, local governments — despite glaring evidence to the contrary — are not stupid. When they know that assessed values have dropped, they are going to want to do something to shore up their tax base. And they can get very creative in how that’s done.
It is very hard to tell a home seller their home is not worth now what they paid for it only a year ago; I do hope this Make Home Affordable plan can make a difference for a lot of people.