Arizona historic property tax reduction for Phoenix homes

At a glance

Who qualifies for the Arizona historic property tax program

The State Historic Property Tax Reclassification program, known as SPT, is run by two offices. The State Historic Preservation Office (SHPO) decides whether a house qualifies and checks its upkeep, and the county assessor changes the tax class and works out the tax. Arizona law (ARS 42-12101 to 42-12108) sets three tests for a home, and the house has to pass all of them.

National Register listing for the historic property tax class

The house must be on the National Register of Historic Places, either on its own or as a contributor to a National Register district. The application form says "If no, STOP" at that question. City of Phoenix HP zoning doesn't count on its own, so a house can be inside a City historic district, under full City design review, and still not qualify.

Contributors and the historic property tax

Only contributing houses in a National Register district qualify; noncontributors on the same street don't. Status follows the house's integrity, so a contributor that loses its original windows or front facade can be reclassified, and with it goes the tax eligibility.

Owner-occupied: the historic property tax rule on rentals

The law covers "noncommercial historic property": no business is run on it for profit, and it meets the State Parks Board's minimum maintenance standards. The application asks whether you live in the house and whether it's rented, including as a short-term rental such as Airbnb. If you plan to rent the house out, even part-time, this program isn't for you.

Phoenix districts on the National Register for the historic property tax

Every district below is on both the Phoenix register and the National Register, so its contributors can apply. National Register boundaries were drawn separately from the City's and several were enlarged later, so check the house's own status rather than the district name.

Checking a Phoenix home's historic property tax eligibility

The City's My Community Map has a "Historic Properties" layer that marks Phoenix register, National Register and eligible properties. For contributor status, the district's National Register nomination lists each house. Willo's, for example, counts 713 contributing and 67 noncontributing primary buildings, and its 1997 amendment moved 48 noncontributors into the contributing column. Our guide to Phoenix historic districts covers all 37 residential districts on the City register.

What the historic property tax reduction saves

The saving comes from the assessment ratio. A qualifying home moves into class six, assessed at 5 percent of its full cash or limited value, instead of the 10 percent used for owner-occupied homes in class three. SHPO puts the net cut at 35 to 45 percent; the exact figure depends on the special assessments in your area, and the county assessor can tell you the amount for a given house.

Historic property tax savings over a 15-year term

Turn that into dollars with the seller's tax bill. On every $1,000 of yearly property tax, the cut is $350 to $450 a year. Over a full 15-year term, that's $5,250 to $6,750 for every $1,000 of yearly tax, before any change in the bill itself. Ask for the current bill when you see the listing, and use it to compare two houses with different status.

Historic property tax and home values in the SHPO study

A SHPO study of 12,033 Phoenix home sales in 2006 found that contributing homes in National Register districts that had the tax reduction sold for about 57 percent more than comparable homes outside districts, against about 40.5 percent for contributors without it and 18.4 percent for homes in City-only districts. Take-up varied widely: 97.9 percent of eligible Willo houses were enrolled that year, against 38.4 percent in Coronado-Country Club and 2.1 percent in Oakland. The figures are from 2006 sales, so treat them as history, but they're the State's own evidence that the classification and higher sale prices went together in Phoenix that year. They aren't a forecast for any one house.

How to apply for the historic property tax class in Maricopa County

You apply to the county assessor, not to SHPO, on a form approved by the Department of Revenue, and you consent in writing to SHPO viewing the house. The assessor sends the application to SHPO within ten days.

Historic property tax application deadlines

SHPO asks that the application, with two photographs (the front, and an angle showing the front and one side), reach the assessor by June 30 to be enrolled for the next tax year; applicants usually hear within 30 days. SHPO must decide by August 1. An application approved by August 1 counts for the next tax year, and one approved on August 2 waits an extra year, so a June application is worth a year of savings. Mail it to the Maricopa County Assessor at 301 W. Jefferson St., Phoenix, AZ 85003, (602) 506-3406. A denied owner can appeal to the tax court or superior court.

Historic property tax maintenance agreement

In return you sign a 15-year agreement to maintain the house and keep its historic features, materials and workmanship. Any work on the publicly visible parts of the house, beyond housekeeping, goes to SHPO in writing before it starts and has to meet the Secretary of the Interior's Standards for Rehabilitation. SHPO has 30 calendar days to comment, and you send photos within 30 days of finishing. The minimum standards cover the roof, drainage, windows, doors, security, pests and fire risk, and a condemned property loses its status. SHPO can also ask for a report on continued qualification; miss it by 90 days after written notice and the house is withdrawn and penalized.

Buying a Phoenix home already in the historic property tax program

A sale doesn't end the classification by itself, as long as the house still qualifies. Keeping it is the buyer's job, and it needs paperwork before the next tax year.

Historic property tax affidavit for a new owner

To keep the reduction, you sign SHPO's Affidavit of Change of Ownership, agreeing to the maintenance rules, plan review and site visits. Every current owner has to sign, and the classification runs only for what's left of the current 15-year period, after which you can apply to renew. The assessor marks each classified year on the rolls as "historic property (potential additional tax)", which is how you'll spot it on a parcel record.

Historic property tax penalty if the home stops qualifying

If the house stops qualifying, for example because you rent it out, you must tell the assessor before the next January 1. The next tax bill then carries a penalty equal to the lesser of 50 percent of all the tax saved during the classification or 50 percent of the property's market value, plus another 15 percent of that penalty if you didn't give notice. There's no penalty if the house passes to a tax-exempt owner or is destroyed by fire or an act of God, and penalties reach back only over the current 15-year period. If you're buying a classified house with any plan to rent it, price that penalty into your offer.

Federal credit and other historic property tax incentives in Arizona

Federal rehabilitation credit: income-producing historic property only

The federal Historic Preservation Tax Credit is 20 percent of qualified rehabilitation spending on a certified historic building, but it applies only to income-producing property. A home you live in doesn't qualify. A long- or short-term rental can, if it stays income-producing for at least five years after the work and the rehabilitation spending equals or exceeds the building's adjusted basis. The credit is taken over five years, and the National Park Service certifies the work through a three-part application filed electronically.

Commercial historic property tax class for rentals

A separate state program, in class seven or eight with a 10-year term, is open to income-producing properties, rental homes included, whose owners are doing a significant rehabilitation. So the same house can fit one program or the other depending on whether you live in it, never both at once.

The City of Phoenix has no property tax break of its own. Its help is the Exterior Rehabilitation Grant, which pays half of approved exterior work; the Phoenix HP zoning guide explains the grant's conservation easement. Owners can also take a federal charitable deduction for donating a preservation easement to a nonprofit preservation group. For how the tax step fits with inspection and financing, see buying a historic home in Phoenix. Joe Janus can ask a seller for the current tax bill and classification papers before you write an offer. This guide explains how the programs work; it isn't tax or legal advice, so confirm what a specific house will save, and any penalty exposure, with the Maricopa County Assessor and a CPA or real estate attorney before you rely on it.

Arizona historic property tax FAQs