Arizona Jobs Bill has a Dirty Little Secret

Arizona HB 2001 Signed by the Governor

HB 2001, called the “Jobs Bill” was signed by the governor in late February. With little fanfare or debate, the 214 page bill was approved that will give tax incentives to businesses to help them hire more employees. But, buried within the bill was one funding provision that might increase the property tax on thousands of homes in Arizona.

Here’s how it works…Most Residents of Arizona did not realize that their property tax on primary residence, 2nd home and/or vacation home was lowered by a credit from the state general fund to the county in which the property sits. That credit was automatic for all Class 3 properties, which included primary residence, 2nd home and vacation home properties.

This bill changes all that. First, only primary residence homes will be Class 3 properties. 2nd home and vacation home will become Class 4, taxed at a higher rate as rentals. And, here’s the kicker. Homeowners will have to “opt-in” for the credit by completing an Affidavit every other even-numbered year, starting in 2012, attesting that they or a family member occupy the home. That affidavit will be mailed with the Notice of Full Cash Value that is typically sent in February of every year. Homeowners will have 60 days to complete and return the affidavit in order to remain as a Class 3 property. If they fail to submit the affidavit, on the 61st day, that property will become a Class 4 property and their tax bill will increase by as much as $600, according to budget estimates.

This bill will provide incentives to businesses even if they do not hire any additional employees. But, this bill will certainly affect thousands of homeowners, already struggling to cover the costs of the home, by increasing their taxes. All owners of 2nd homes and vacation homes will see their taxes increase. Many people who might be entitled to the credit will overlook the form in the mail, or might complete it improperly, and they will see their taxes increase. While they always maintain the right to appeal the valuation of their home, they cannot appeal this re-classification. They would need to wait 2 years before the opt in is available again, when the notices are mailed in 2014 and so on.

For real estate agents and brokers, this is an opportunity to notify every homeowner you know and every buyer who closes in 2011 and beyond. Your information could save them hundreds of dollars and they will thank you for that.