Arizona Property Taxes Question (Single Family Residence)

[Matt Gildersleeve]

Hi Everyone - I am looking to get my start in owning rental properties this year (single family residence) and have been running analyses in different markets throughout AZ where I live. I wanted to get your thoughts on how to best estimate annual property taxes and if my method makes sense in practice. I have been doing a little research and it seems like, for AZ, property taxes will be based on the lesser of the Full Cash Value (FCV) or the Limited Property Value (LPV). It also seems that the LPV is capped at an annual increase of 5% for primary/other residential properties. 

There are rules (rule A and rule B) that apply to determining your LPV for a given tax year, with Rule A being an increase of 5% to the prior year LPV, and Rule B which list some factors that trigger re-assessment. My question relates to rule B, as a "change in use" of the property is listed as a factor that would trigger rule B. From what I can find online, it seems like this "change in use" more applies to a change from residential to commercial, rather than a change from a primary residence classification to a non-primary residence classification (i.e. rental). 

Given this, am I correct in just estimating annual property taxes for a property by taking the prior year LPV and adding 5% (given that this doesn't exceed FCV)? Just curious what others are seeing in practice, and if this is typically what happens, or if I am way off base here and a large re-assessment based on new purchase price usually occurs regardless of what I mentioned above. Any thoughts/experiences you could share on this topic would be greatly appreciated. Thanks in advance!