By Lotzar Law Firm, P.C.

03/12/2015 All business organizations, developers, and investors within Arizona must take proactive steps to reduce tax liability in order to maximize their return on investment (ROI), reduce operating costs, and enhance profitability of commercial real estate. Minimizing tax liabilities can make a big difference in costs.


Property taxes are one of the most costly taxes for commercial real estate owners, investors, and organizations with their base of operations in Arizona. Lotzar Law Firm, PC has extensive experience representing individuals and organizations throughout Arizona who wish to reduce property tax liabilities.


Our Scottsdale, AZ real estate lawyers provide a comprehensive evaluation of your current tax liabilities and identify any potential reductions in taxes that could be achieved. We can provide assistance with developing a deeper understanding of the important differences between property tax abatement vs. property tax exemptions. We will work hard to ensure your tax liability is kept to the minimum necessary to remain in full compliance with Arizona state laws. Call today to speak with a real estate lawyer for assistance in tax planning for your new construction real estate project or for existing commercial real estate.


Understanding the Differences Between Property Tax Abatement vs. Property Tax Exemptions


The difference between property tax abatement vs. property tax exemption is simple. Exemptions reduce a property’s assessed value. Property tax calculations for both residential and commercial real estate are based on the assessments of the value of the property, which are performed regularly by the County Assessor. Reducing the assessed value results in a reduction in total tax liability. Abatements do not involve a reduction in the value of the property. Instead, tax credits are applied to the amount of taxes owed, reducing the total tax bill.


In Arizona, there are numerous ways to reduce property tax liability for commercial enterprises. The Government Property Lease Excise Tax (GPLET), for example, is a program established by Arizona to encourage development through the reduction of operating costs. The GPLET program works by substituting an excise tax for a real property tax. The land be conveyed to a government entity and then leased back for use by private enterprise. The excise tax is based on the gross square footage of the building, and is established based on the type of business being operated.


The excise tax may be substituted for the property tax for a period of up to 25 years for GPLET participants. If the property is within a Redevelopment Area and is located with a Central Business District, the excise tax can be abated for a period of up to 8 years after the building’s certificate of occupancy is first issued.


Other forms of property tax abatement and property tax exemptions may also be available, including abatements and exemptions for property not owned by and leased from the government. A developer, investor, or owner of commercial property should speak with a Scottsdale, AZ business lawyer for help determining what types of property tax exemptions and property tax abatements may be available.


Lotzar Law Firm, PC knows federal and state tax rules and can provide your business with comprehensive advice on reduction of all types of tax liabilities. To learn more about the differences between property tax abatement vs. property tax exemption, call today.