Property tax relief for seniors in Arizona

Are Seniors in Arizona entitled to some property tax relief?

Yes. The relief comes in several forms.

First, there is an exemption for widows, widowers and totally disabled persons. For qualified people, the exemption has the effect of reducing the assessed value of the real property by up to $3,000 with a corresponding reduction in property tax. Second, there is a program of tax deferral. Under the deferral program, payment of property taxes is not required until the real property is sold or the person dies or the property becomes income producing. Third, under Proposition 104, which passed in 2000, qualified individuals are granted a property tax freeze.

Where does a Senior apply for an exemption or freeze?

Apply at the office of your county tax assessor. In Pima County, phone Grace Gutierrez at 243-6260 to inquire about exemptions and phone 243-6254 to Speak to Monica Garayzar about the Prop. 104 property tax freeze.

What are the requirements to obtain an exemption?

Arizona Revised Statute Section 42-11111. Exemption for property of widows, widowers and disabled persons

A. The property of widows, widowers and disabled persons who are residents of this state is exempt from taxation to the extent allowed by article IX, sections 2, 2.1, 2.2 and 2.3, Constitution of Arizona, and subject to the conditions and limitations prescribed by this section.

B. Pursuant to article IX, section 2.3, Constitution of Arizona, the exemptions from taxation under this section are allowed in the amount of

1. Three thousand dollars if the person's total assessment does not exceed ten thousand dollars.

2. No exemption if the person's total assessment exceeds ten thousand dollars.

C. For the purpose of determining the amount of the allowable exemption pursuant to subsection B, the person's total assessment shall not include the value of any vehicle that is taxed under title 28, chapter 16, article 3.

D. Pursuant to article IX, section 2.3, Constitution of Arizona, to qualify for this exemption, the total income from all sources of the claimant and the claimant's spouse and the income from all sources of all of the claimant's children who resided with the claimant in the claimant's residence in the year immediately preceding the year for which the claimant applies for the exemption shall not exceed:

1. Thirteen thousand two hundred dollars if none of the claimant's children under eighteen years of age resided with the claimant in the claimant's residence.

2. Eighteen thousand eight hundred forty dollars if one or more of the claimant's children residing with the claimant in the claimant's residence was either: (a) Under eighteen years of age. (b) Totally and permanently, physically or mentally disabled, as certified by competent medical authority as provided by law.

E. For the purposes of subsection D, "income from all sources" means the sum of the following, but excluding the items listed in subsection F:

1. Adjusted gross income as defined by the department.

2. The amount of capital gains excluded from adjusted gross income.

3. Nontaxable strike benefits.

4. Nontaxable interest that is received from the federal government or any of its instrumentalities.

5. Payments that are received from a retirement program and paid by: (a) This state or any of its political subdivisions. (b) The United States through any of its agencies, instrumentalities or programs, except as provided in subsection F. 6. The gross amount of any pension or annuity that is not otherwise exempted.

F. Notwithstanding subsection E, "income from all sources" does not include monies received from: 1. Cash public assistance and relief. 2. Railroad retirement benefits. 3. Payments under the federal social security act (49 Stat. 620). 4. Payments under the unemployment insurance laws of this state. 5. Payments from veterans disability pensions. 6. Workers' compensation payments. 7. "Loss of time" insurance. 8. Gifts from nongovernmental sources, surplus foods or other relief in kind supplied by a governmental agency.

G. The exemption described by this section applies independently to: 1. The assessed valuation determined for secondary property tax purposes from the full cash value of the property and improvements owned by the individual. 2. The assessed valuation determined for primary property tax purposes from the limited property value of the property and improvements owned by the individual.

H. Any dollar amount of exemption that is unused in a tax year against the limited property value of property and improvements owned by the individual may be applied for the tax year against the value of personal property subject to special property taxes including the taxes collected pursuant to title 5, chapter 3, article 3 and title 28, chapter 16, article 3.

I. An individual is not entitled to property tax exemptions in the aggregate that exceed the maximum allowed to a widow, widower or disabled person even if the person is eligible for an exemption in more than one category.

What are the requirements for deferral?

Arizona Revised Statute Section 42-17302. Election to defer residential property taxes; qualifications

A. An individual who meets the qualifications prescribed by this section, or the individual's legal representative, may elect to defer property taxes on the individual's qualifying residence for a taxable year pursuant to this article.

B. To qualify for the deferral the individual shall meet all of the following requirements:

1. The individual shall be at least seventy years of age on the date the deferral claim form is filed.

2. The individual, either individually or with another individual who resides in the residence, shall own the residence or be purchasing the residence under a recorded instrument of sale or shall hold the property under the terms of a real estate trust.

3. The individual must either: (a) Have lived in the current residence for at least six years immediately preceding the date the deferral claim form is filed. (b) Have lived in this state for at least ten years immediately preceding the date the deferral claim form is filed.

4. The individual may not own or have any legal, equitable, beneficial or security interest in any other residence or other real property, wherever it may be located, except indirectly through an investment security, such as a mutual fund, that includes real property among its assets.

C. In the case of a married couple, both spouses shall: 1. Meet the requirements prescribed by subsection B. 2. Consent to the deferral of taxes, regardless of whether both spouses have an ownership interest in the residence.

D. In addition to the requirements prescribed by subsections B and C, the total taxable income of all persons residing in the residence for the taxable year immediately preceding the current year may not exceed ten thousand dollars.

What are the requirements for a valuation freeze?

Appendix D. Part One. 2000's voter approved "Property Valuation Protection Option" Constitutional Amendment (Proposition 104) Excerpts from the 2000 Second Regular Session House Concurrent Resolution * 2028 *

Definition: A legislative measure containing a declaration or expression of opinion, will, intent or "resolve" in matters within the Legislature's legal purview. (Derived from the AZ Legislative Manual.)

Section 18. Residential ad valorem tax limits; limit on increase in values; definitions (7) A resident of this state who is sixty-five years of age or older may apply to the county assessor for a property valuation protection option on the person's primary residence, including not more than ten acres of undeveloped appurtenant land. The resident may apply for a property valuation protection option after residing in the primary residence for two years. If one person owns the property, the person's total income from all sources including nontaxable income shall not exceed four hundred per cent of the supplemental security income benefit rate established by section 1611 of the social security act. If the property is owned by two or more persons, including a husband and wife, at least one of the owners must be sixty-five years of age or older and the owners' combined total income from all sources including nontaxable income shall not exceed five hundred per cent of the supplemental security income benefit rate established by section 1611 of the social security act. The assessor shall review the owner's income qualifications on a triennial basis and shall use the owner's average total income during the previous three years for the review. If the county assessor approves a property valuation protection option, the value of the primary residence shall remain fixed at the full cash value in effect during the year the property valuation protection option is filed and as long as the owner remains eligible. To remain eligible, the county assessor shall require a qualifying resident to reapply for the property valuation protection option every three years and shall send a notice of reapplication to qualifying residents six months before the three year reapplication requirement. If title to the property is conveyed to any person who does not qualify for the property valuation protection option, the property valuation protection option terminate, and the property shall revert to its current full cash value. (8) The legislature shall provide by law a system of property taxation consistent with the provisions of this section. (9) For purposes of this section: (a) "Owner" means the owner of record of the property and includes a person who owns the majority beneficial interest of a living trust. (b) "Primary residence" means all owner occupied real property and improvements to that real property in this state that is a single family home, condominium, townhouse or an owner occupied mobile home and that is used for residential purposes.

Do I lose my exemption if I put my property in a trust?

If the trust is a revocable living trust, definitely not. If the trust is an irrevocable trust, probably not, as long as the senior remains the income beneficiary of the trust.

 

Paul B. Bartlett, P.C.

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