What This Statute Says
A.R.S. § 42-11102 exempts property owned by federal, state, county, and municipal government from property taxation, with detailed rules for property leased to private parties. The exemption tracks Article IX, Section 2 of the Arizona Constitution.
1. Property that is owned by a nonprofit organization but is used by this state or a political subdivision during the entire tax year exclusively for a governmental activity.
A.R.S. § 42-11102Government property is constitutionally exempt in Arizona. This statute implements the constitutional rule and addresses the recurring problem of government property leased to private operators, airports leased to airlines, public land leased to ranchers, downtown buildings leased to private tenants. The statute generally taxes the leasehold interest, not the underlying fee.
For estate work, the rule occasionally matters when a decedent held a possessory interest in government property, such as a long-term lease on state trust land. The leasehold has value and may be subject to its own tax under related statutes.
When This Statute Comes Into Play
This statute typically becomes relevant in three situations. A property owner is reviewing an annual tax bill. An estate is being administered and the personal representative has to address ongoing property tax obligations. Or a charitable or nonprofit organization is claiming or maintaining an exemption. The statute is part of a larger framework in chapter 11 of title 42 and operates alongside the related sections cross-linked below.
What This Means for Arizona Families
Most families never think about Arizona property tax statutes until they are sitting at a closing table on an inherited home, reviewing an unexpected tax bill, or trying to claim an exemption for a surviving spouse. When that moment arrives, the rules in chapter 11 of title 42 are the framework you are working inside.
If you are holding real property in a revocable living trust, the trust structure does not by itself remove the property from the tax rolls. The exemption has to come from a specific statute. Our FAQ on what to do with property you inherit in Arizona covers the immediate practical questions, and our FAQ on probate timelines covers how a contested or stalled administration can affect tax filings and exemptions.
If you are administering an estate, the personal representative has a duty to keep property taxes current, to claim available exemptions where appropriate, and to maintain documentation in case the assessor reviews a claim later. Calendar the February exemption filing window each year for any property where a widow, widower, or disability exemption applies. Once the deadline passes, the saving for that year is usually lost.