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ARIZONA STATE SENATE
Fifty-Fourth Legislature, First Regular Session
possessory improvements; government property; assessment
Purpose
Requires that possessory improvements qualify for a limited property value and are valued as real 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 property or personal property in order for the property to be properly valued and assessed. Distinguishing between real property 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: 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.
There is no anticipated fiscal impact to the state General Fund associated with this legislation.
Provisions
1. Requires that the assessor shall use standard appraisal methods and techniques to value possessory improvements.
2. Requires the limited property value of possessory improvements to be calculated pursuant to statutory limitation valuation increases.
3. Specifies that the limited property value of possessory improvements is not subject to the statutory exemption for personal property.
4. Specifies that ownership of improvements on government property shall be considered sufficient security for payment of taxes levied and may be placed on the real property roll.
5. Requires the assessment, together with interest, penalties and costs, to be transferred to the personal property roll, if the tax on any possessory improvement remains unpaid at the date set for selling the real property tax liens. The property is then subject to immediate seizure and sale in accordance with personal property statutes.
6. Repeals statute relating to:
a) improvements on unpatented land, a mining claim or state land not secured by patented real property being valued as personal property; and
b) a dwelling on possessory rights that is taxed as personal property is not subject to seizure or sale for delinquent taxes as personal property but is subject to procedures for delinquent taxes as real property.
7. Clarifies that possessory improvements on mining claims are valued as centrally assessed property.
8. Defines possessory improvement as all residential, commercial, industrial and agricultural buildings of every nature, together with appurtenant awnings, decks, docks, garages, carports, storage or other incidental buildings, wells, stock tanks, irrigation ditches and other fixed property located on federal, state, county or municipal property or the property of another political subdivision of Arizona that is owned by the possessor.
9. Becomes effective on the general effective date.
Prepared by Senate Research
February 4, 2019
CS/kja