Thousands of homeowners in the greater Flagstaff area were on the receiving end of an unpleasant surprise when they got their property tax bills last week.
The blue and white tax notices contained large increases for some homeowners -- about $360 for the typical, single- family home here in Flagstaff.
Those affected by the increase are mainly second-home owners and those who have residential rental properties, according to Coconino County Assessor Chris Mazon.
The sudden change in taxes can be traced back to the Legislature, which removed a loophole in the tax code last year that had previously allowed homeowners to claim a school tax credit for their vacation homes and rental properties as well as for their primary residences.
Under the new law, homeowners can only deduct their primary residence.
The tax credit is commonly referred to as "the homeowner's rebate" and is listed on county property tax notices as a negative number after "SD#1 Flagstaff" for properties in the Flagstaff Unified School District.
Mazon estimates as many as 10,300 properties in Coconino County are affected by the reclassification.
She said the amount that a reclassified property owner will have to pay varies, depending on the property valuation as well as local taxing districts.
"It could be as low as $200," said Mazon, adding that the credit is capped at $600 a year.
Collectively, the crackdown is designed to save the state $39 million to fund higher rebates for those who qualify.
The property tax bills are based on home valuations assessed by the county for an 18-month period beginning in the summer of 2010 and ending in December 2011 and the tax rates set by various agencies with local taxing authority earlier this year.
In total, the state has listed eight separate characteristics that can trigger for assessors an inquiry into whether a home should be classified as a "non-primary residence."
They include when a property is one of the following:
-- owned by limited liability corporation
-- has an out-of-county mailing address
-- owned by developers
-- owned by a corporation
-- held by a title company
-- the property owns multiple residential parcels
-- has a different mailing address than the actual residence
Armando Ruiz, the deputy county assessor, said the county has identified 1,300 rental properties and 9,000 "non-primary" homes since it began verifying eligibility requirements earlier this year.
The number could be revised downward later this year, as homeowners who did not respond to the county's notice to reclassify their property were included in his estimates.
On an annual basis, the county sends out roughly 78,000 assessment notices, Mazon said.
There is a provision for a residential property to be rented out to a "qualified" family member and not be considered a rental property.
Those renting to one of their children or grandchildren, a sibling, a stepchild, a parent (or stepfather/mother) or an in-law would not need to classify their home as a rental.
The assessor's office has set up an appeal process for property owners who want to dispute the reclassification, asking them to file an appeal with the County Board of Supervisors within 30 days of the mailing date of the notification. The county is expected to mail out a final notice about the reclassification to homeowners next week.
Joe Ferguson can be reached at 556-2253 or firstname.lastname@example.org.