Arizona's General Property Tax Law

• The Department of Revenue does not collect property taxes for household goods. Instead of a tax on personal vehicles, the Arizona Department of Transportation collects a Vehicle License Tax from residents that own vehicles within the state. The tax rate depends upon the assessed value of the vehicle and base rate. Arizona residents are responsible for paying real property taxes. Thus, the legal distinction between real and personal property is important for Arizona residents to reduce their tax liabilities.
  
  

Distinction Laws

• To tax property, each county appoints a tax assessor to value real and personal property within Arizona. The county assessor uses a classification system to categorize real property and personal property. The primary test to distinguish real and personal property is whether the property is annexed or affixed to the land, the property owner's intent and how the owner uses the property. Typically, real property is attached to the land and not easily disconnected or detachable. Personal property, however, is movable and more easily detachable.
  
  

Definition of Personal Property

• In Arizona, the Department of Revenue considers all property as personal property, except real estate. Real estate taxes are assessed separately and are not taxed as personal property. Personal property includes movable property unattached to real estate. Personal property can be used for business or personal use. The Arizona Constitution and Arizona Revised Code statutes provide several property tax exemptions for residents.
  
  

Personal Property Exemption

• Arizona's tax laws allow residents to receive an exemption from paying taxes on personal household goods. Residents that use personal property for their own private and non-commercial use do not have to pay taxes. These items include household furnishings, jewelry, clothes and household goods used for recreational purposes. Taxpayers must pay taxes on personal property used for business use such as cars they lease. Under Arizona's tax laws, the state can tax personal property rented or leased, since this property is generally for commercial use. Residents must pay personal property taxes on their mobile or manufactured homes.
  
  

Method of Taxation

• If taxpayers are subject to personal property taxes, as of February 2011, Arizona law provides a $50,000 tax exemption for the first $50,000 of the assessed value. Beyond that, taxpayers are responsible for the remaining taxes based on their county's tax rates. County tax assessors assess the personal property taxes by using a replacement cost method minus depreciation. For instance, based on the taxpayer's original purchase price to obtain the property, the tax assessor depreciates it and taxes the difference.
  
  

Considerations

• Since tax laws can frequently change, you should not use this information as a substitute for legal or tax advice. Seek advice through a certified accountant or tax attorney licensed to practice law in your jurisdiction.