What is a Rule B reset on Arizona property taxes?

Your Limited Property Value (LPV) can normally rise only 5% a year, but a handful of triggers throw that cap out the window: a property new to the tax roll, new construction, a split or combined parcel, or a change in use. That exception is a Rule B reset. Instead of growing last year's capped value by 5%, the assessor wipes that path and recomputes your LPV from scratch, setting it to the same ratio of value that comparable homes in your area already carry. The rule lives in A.R.S. 42-13302. It is the reason a new custom home, a casita, or a lot split can push your taxable value up by far more than 5% the first year.

The everyday 5% protection comes from Rule A, in A.R.S. 42-13301. Rule B is its mirror image: it applies exactly when Rule A does not. Below is what triggers a Rule B reset, how the assessor calculates the new number, why there is no single "your taxes go up X percent" answer, and how to check the figure on your Notice of Value.

Arizona taxes Limited Property Value, capped at 5% in a normal year

Arizona bills property tax on your Limited Property Value, a controlled figure that in a normal year rises no more than 5%. Every parcel carries two values. The Full Cash Value (FCV) is the market value the assessor estimates each year. The Arizona Department of Revenue defines it as the value that "is synonymous with market value." The Limited Property Value is a separate, capped figure, and it is what your taxes are actually calculated on.

The cap came from the ballot box. Arizona voters approved Proposition 117 in 2012, and the Department of Revenue states it "imposed a limitation of the LPV's annual growth to 5% beginning in tax year 2015." In a year with no physical change to your property, the assessor uses Rule A. The Department describes Rule A as "a single calculation of the preceding valuation year LPV of the property plus five percent of that value." The LPV can never exceed the FCV, but in a rising market it usually sits well below it.

That 5% cap protects existing, unchanged property. It is precisely the protection that goes away when a property is new, built on, or split. That is where Rule B takes over.

What a Rule B reset actually does

A Rule B reset recomputes your LPV to match the value ratio of comparable homes, rather than carrying last year's capped number forward. The Department of Revenue states the rule plainly: under Rule B, a property's LPV is "established at a level or percentage of FCV that is comparable to that of other properties of the same or similar use or classification." In plain terms, the assessor first sets your Full Cash Value, then looks at how the LPV compares to FCV across similar homes nearby, and applies that same ratio to your property.

A.R.S. 42-13302 lists exactly which properties get the Rule B treatment. The main triggers are:

• New construction. A property "modified by new construction," or one where existing improvements were destroyed or demolished. This is the trigger that catches new-home owners.
• A change in use. A property whose objectively verifiable use changed since the prior tax year.
• A split or consolidation. A parcel divided or combined between January 1 and September 30 of the valuation year, unless a government entity initiated it.
• An omitted property. Land or improvements that were erroneously left off the tax roll the prior year.

The Maricopa County Assessor applies the same logic. Its Rule B policy explains that the LPV is reset to a percentage of FCV comparable to similar properties, and that the Rule B ratio is recalculated each year from the LPVs and FCVs of all properties with similar classification or use. So the reset is not a penalty. It lands your property in line with what comparable homes already pay.

Why new construction triggers a reset, not a 5% bump

New construction triggers Rule B because the finished home is, in tax terms, a different property than the bare lot the assessor valued last year. When you build on raw land, last year's LPV reflects only the land, which carries a small taxable value. The 5% cap, applied to a tiny number, would leave a finished house taxed almost like an empty lot. Rule B closes that gap by resetting the whole improved property to the comparable ratio.

There is a size test. The Maricopa County Assessor's policy notes that Rule B must be used when new construction equals ten percent or more of the prior valuation year's FCV, and A.R.S. 42-13302 separately frames a 15% modification threshold in the statute's own terms. A finished custom home on a vacant lot clears that bar easily. A minor change might not, and the assessor uses discretion within those rules. The practical point is that a full new home almost always resets, while a small cosmetic change usually does not.

This is why there is no single percentage answer. The increase depends on your home's finished market value and on the comparable ratio in your area, both of which vary by home and location. A modest home on a lot you already paid taxes on sees a smaller step than a large home built on cheap raw land. For the full breakdown of what to expect on a new build, see our guide on how much your property taxes go up after building new construction in Arizona.

After the reset, the 5% cap comes back

Once Rule B sets your new LPV, that figure becomes your new baseline and Rule A's 5% cap protects you again every year after. The reset is a one-time event, not a recurring jump. The year your home hits the roll, the assessor uses Rule B. The next year, your property is unchanged, so it falls back under Rule A, and your LPV can rise no more than 5% from the reset value.

You see the new number on your Notice of Value, the document the assessor mails listing your property's classification, Full Cash Value, and Limited Property Value for the year. For new construction or a split, the assessor may send a supplemental or amended notice once the change is added to the roll. That notice is where the Rule B figure first appears, and it is your cue to check the math.

What you can challenge is specific. You generally cannot appeal the LPV directly, because it is the product of the statutory Rule A or Rule B formula. You can appeal the Full Cash Value and the property classification, because the LPV is calculated from them. If the assessor's FCV overstates what your home is really worth, a successful appeal lowers the FCV, which can pull down the LPV the formula produces. The deadline to appeal is short and runs from the date on your notice.

Property tax rules, ratios, comparable ratios, and deadlines are detailed, they vary by county and tax year, and the law and rates can change. The mechanism above is accurate as of this writing, but your exact reset value and appeal deadline live on your own Notice of Value. Before you rely on a figure or file an appeal, confirm the current numbers with the Arizona Department of Revenue and your county assessor, who can pull the values specific to your parcel.

Building with Jematell Homes

Clear allowances and an honest cost breakdown are how we start every custom home. We would rather answer your questions before you build than after, so get in touch any time.

Sources

• A.R.S. 42-13302 (Limited property value in cases of omissions and changes; Rule B)
• A.R.S. 42-13301 (Limited property value; Rule A 5% increase)
• Arizona Department of Revenue: Limited Property Value (assessment procedures)
• Maricopa County Assessor: Rule B Policy (internal policy and procedures)