Guest Post: Homeowners Rebate Repeal of Affidavit

Last year the legislature passed HB2001, more commonly referred to as the “Jobs Bill” or the “Commerce Authority Bill.” The promoted intent of this bill was to create a more business-friendly state to attract all types of businesses both large and small, create jobs, and provide tax relief to businesses. The legislation focused on several key areas: corporate income, businesses property tax cuts, job training, the Arizona Competes Fund, and the newly formed Arizona Commerce Authority.

Currently many homeowners are unaware that their residential property taxes are lowered by a payment made from the State General Fund directly to the county in which the property is located. This payment is paid for Residential Properties Class Three of the property tax code, which generally includes owner occupied primary residences. This payment is commonly called the “homeowners rebate.”

Under the law, the process of receiving the rebate is complicated by requiring the homeowner to go through a cumbersome process of signing an affidavit beginning in 2012 and subsequent even numbered years, under penalty of perjury, that they live in the home or that the home is being utilized by a relative.

As outlined in the law, the affidavit is to be mailed along with the annual Notice of Full Cash Value to the owners of Class Three Property. The forms are to be completed and returned to the County Assessor within 60 days or the Residential Property will be reclassified as Class Four and the property taxes increased by as much as $600 depending on the home’s value.

Legislation’s Impact

Amongst many problems with the affidavit is that it presumes the homeowner is guilty until proven innocent. Many unsuspecting homeowners, unaware of the requirement or the consequences that the affidavit will be mailed along with the Notice of Full Cash Value, will miss the deadline to return the affidavit, resulting in their properties automatic reclassification of Class Four Property and the corresponding increase in property tax. The legislation creates a paperwork bureaucracy impacting approximately 1.8 million residential properties and increase costs to county governments in our state.

Action Points

• Repeal the affidavit requirement impacting homeowners, counties, and tax dollars
• Replace the affidavit with the requirement that county assessors target those properties that have a high probability of not being someone’s primary residence such as out-of-state owners, multiple properties in the same county, or those owned in the name of a business entity. Target the problem and not impact every homeowner in Arizona.
• Restore the previous penalty for those that receive the homeowner’s rebate illegally. The previous penalty was 2-times the amount of property taxes. The penalty was reduced to 2-times the amount of the rebate. The reduction in the penalty for those properties in the wrong class sends the wrong message. If you want property classified by class correctly, why lower the penalty?

Guest Author

Tom Farley, CEO of the Arizona Association of REALTORS.