Assigned to FIN FOR
COMMITTEE
Assigned to FIN FOR
COMMITTEE
ARIZONA STATE SENATE
Fifty-Third Legislature, Second Regular Session
taxation; improvements on possessory rights
Purpose
Requires improvements and other fixed property located on unpatented land, state land or a mining claim to be valued in the same manner as real property rather than personal property.
Background
A governmental entity owning a parcel of land may allow real property improvements to be built on the land. These privately-owned improvements are known as improvements on possessory rights for property tax purposes. Statute currently requires that improvements on possessory rights, along with other fixed property, that are located on unpatented land, state land or a mining claim be valued as personal property (A.R.S. § 42-19003).
Property must be identified as either real or personal property in order for the property to be properly valued and assessed. Distinguishing between real and personal property ensures that all property is taxed only once, either on the personal or the real tax roll. The primary characteristics that distinguish personal property from real property include the following: 1) the manner and extent to which the item is annexed to land or to improvements; 2) how the property is used; and 3) the intent of the property owner (Department of Revenue Personal Property Manual).
There may be a fiscal impact to the state General Fund associated with this legislation due to a potential increase in the property tax base and the amount of property taxes collected.
Provisions
1. Requires improvements and other fixed property located on unpatented land, a mining claim or state land not secured by patented real property to be valued in the same manner as real property, rather than personal property.
2. Specifies that improvements and other fixed property located on unpatented land, a mining claim or state land not secured by patented real property are subject to sale for delinquent taxes as real property, rather than personal property.
3. Repeals statue relating to the seizure and sale of improvements on possessory rights for delinquent taxes as personal property.
4. Specifies that improvements on possessory rights are subject to the same limitations on valuation as real property.
5. Specifies that the valuation date for improvements on possessory rights is January 1 of the year preceding the year in which taxes are levied.
6. Specifies that the valuation year for improvements on possessory rights is the calendar year preceding the year in which the taxes are levied.
7. Makes a technical change.
8. Becomes effective on the general effective date.
Prepared by Senate Research
January 29, 2018
FB/ZD/lb