As noted in our last blog, the passage of Proposition 117 will alter the way the Maricopa County Assessor determines your property’s assessed value.  Beginning in tax year 2015, your limited property value (“LPV”) will determine both your primary and secondary taxes.  As a result of Proposition 117, a property’s LPV can increase by no more than 5% per year.

While some taxpayers who voted in favor of Proposition 117 believe that any increase in their property taxes will likewise be limited to 5% per year, that is not the case.  The amended law does nothing to limit tax rates, which is the other important variable in the property tax equation.

It is especially important that you take a careful look at both your assessed full cash value (“FCV”) and limited property value (“LPV”) for tax year 2014, which you will receive at the end of February.  These valuations will provide a baseline for your property’s assessed value going forward.  It is critical that both the FCV and LPV be set at appropriate levels and that they not exceed the market value of your property.

Although beginning in tax year 2015, your property taxes will be based on your LPV, the FCV remains important for one reason.  Even under the amended law, your property’s LPV can never exceed its FCV, or market value.  Due to declining market values over the last few years, many properties now have an LPV equal to the FCV.  Thus, any reduction achieved in your tax year 2014 FCV will likely impact the LPV.  In turn, any reduction in your tax year 2014 LPV will dictate your property’s maximum LPVs going forward.  Thus, if you believe your property’s current FCV exceeds its market value, we highly recommend that you file an appeal for tax year 2014.