Tempe Property Taxes: LPV, Classes And Your Mortgage Escrow

If you opened your Tempe tax notice or your mortgage statement and saw a surprise, you are not alone. Property values and tax bills can shift, and that change often flows straight into your escrow. You want to know what drives the numbers and what you can do about them. In this guide, you’ll learn how Arizona’s LPV and FCV work, how property class affects taxes, and why your mortgage escrow changes from year to year. Let’s dive in.

LPV vs FCV in Tempe

What FCV means

Full Cash Value, or FCV, is the assessor’s estimate of market value. Think of it as what a property would likely sell for in the open market. FCV can change more noticeably from year to year as sales, renovations, or new construction shift the local market.

What LPV means

Limited Property Value, or LPV, is an assessed value that uses state rules to limit how fast the taxable value grows. LPV is often the value local taxing districts use when calculating many parts of the property tax bill. LPV usually moves more slowly than FCV.

Why Arizona uses two values

Arizona separates the market value from the taxable value to reduce sudden jumps in tax bills when prices spike. You might see FCV rise quickly in a hot market while LPV increases at a controlled pace. Since many levies use LPV, your taxes and escrow often track that limited value rather than the full market number.

What to check on your notice

Look at your annual Maricopa County assessor notice for both FCV and LPV, along with the property class code. Note year‑over‑year percentage changes. Any large change in these figures, or a class change, can affect your tax bill and your escrow.

Property classes and taxes

What classification means

Your property’s class reflects its use, such as primary residence, residential rental, commercial, or vacant land. Class matters because different rules and tax allocations can apply to different categories. Maricopa County publishes class codes on each parcel record.

Owner‑occupied vs rental

An owner‑occupied home can be treated differently than a rental for certain valuations or exemptions, depending on local rules. A home that is converted from primary residence to rental, or the other way around, can be reclassified. Reclassification can change the taxable base, which can increase or decrease your property tax bill and, in turn, your escrow payment.

How and when class can change

Class can change when the use changes or when the county updates records. Triggers include a change in mailing address, permits for remodeling, use information reported by the owner, or an inspection by the assessor. Class changes appear on the assessor’s annual notice and typically apply in the next tax cycle.

Mortgage escrow basics

How escrow is calculated

Most lenders include an escrow line in your monthly payment to cover property taxes and homeowner’s insurance. Each year your lender runs an escrow analysis to compare expected taxes and insurance for the coming year to your current escrow balance. If expected costs rise, your monthly escrow usually goes up. If costs fall, your payment can go down or you might receive a refund.

The legal framework and typical practices

Federal rules require an annual analysis and allow lenders to hold a cushion, often up to two months of expected disbursements. This cushion helps cover timing differences when bills come due and can make the monthly escrow a bit higher than a straight 12‑month average. Lenders must notify you of changes, shortages, or surpluses.

Why your escrow changes

Escrow changes are usually driven by one or more of the following:

• Property taxes: Increases in LPV or FCV that affect the taxable value, voter‑approved bonds, special district levies, or a change in property class.
• Insurance premiums: Renewal increases, changes in coverage, or new requirements like flood policies.
• Escrow mechanics: A higher lender cushion, a shortage from last year spread over 12 months, or timing differences in when bills are paid.
• One‑time events: Special assessments, reclassification penalties, or corrected past bills.

LPV vs FCV and your escrow

Which value affects your escrow depends on how local taxing districts compute each line on your bill. Many levies in Maricopa County use LPV, while some references to FCV can appear in specific calculations or appeals. Your lender bases escrow on what they expect to pay in the coming cycle, so your next analysis should reflect the latest bill and values.

What Tempe buyers should do

Documents to gather at closing

• County assessor valuation notice with FCV, LPV, and the class code
• The most recent property tax bill
• Closing statement with tax prorations
• Lender’s escrow disclosure showing projected taxes, insurance, and any shortage or cushion
• Homeowner’s insurance declarations page

Questions to ask your lender

• Which tax amounts are you using for next year’s escrow projections?
• How much cushion are you holding and how do you calculate it?
• If there is a shortage, can I pay it in a lump sum or spread it over 12 months?
• When will I receive the annual escrow analysis and how will I be notified?

Questions for the County Assessor or Treasurer

• What are this year’s FCV and LPV and how were they determined?
• What is the current classification code and what would trigger a change?
• What is the deadline and process to protest or appeal my valuation?
• How and when are tax bills issued and due?

When to consider an appeal

You might consider an appeal if FCV looks materially higher than recent comparable sales or if LPV jumps and the market data does not support it. You should also act if the property class appears incorrect, such as a rental code on a home you occupy as your primary residence. Appeals have deadlines and evidence requirements, so review the assessor’s instructions and prepare supporting documents.

Timing tips for Tempe

Expect an annual escrow analysis from your lender. Major county valuation changes typically show up on the annual notice first, then flow into the next tax cycle and your next escrow review. If Tempe market values rise or your property’s use changes, plan for a possible increase in taxes and escrow.

Quick escrow and tax checklist

• Before closing: review the assessor notice and last tax bill, and confirm FCV, LPV, and class.
• At closing: request your lender’s projected escrow analysis and the assumptions for taxes and insurance.
• During your first year: watch for the assessor’s annual notice and your lender’s escrow statement. Compare year‑over‑year changes.
• If something looks off: contact the Maricopa County Assessor about valuation or class and review the appeal steps and timeline.
• To control next year’s payment: consider a valuation appeal if supported by data, confirm the correct class, shop insurance at renewal, and decide whether to pay any escrow shortage in one payment.

If you want help reading your Tempe tax notice or planning for escrow changes before you buy, let’s talk. Our team will walk you through LPV vs FCV, explain how class affects your bill, and help you budget with confidence. Reach out to Unknown Company to get your free home valuation or schedule a consultation.

FAQs

What is the difference between LPV and FCV in Tempe?

• FCV is the assessor’s market value estimate, while LPV is a limited value used for many tax calculations so tax bills do not jump as fast as market prices.

How does property class affect my Maricopa County taxes?

• Class reflects how the property is used, such as primary residence or rental, and different classes can be treated differently for taxes, which can change your bill and escrow.

Why did my mortgage escrow go up this year in Tempe?

• Increases often come from higher property taxes, higher insurance premiums, a larger escrow cushion, or a shortage from last year that your lender spreads over 12 months.

When will my lender update escrow after I buy a Tempe home?

• Your lender updates escrow during the next annual analysis based on expected taxes and insurance for the coming cycle, so changes often appear on your next review.

How can I reduce next year’s escrow payment?

• Consider a supported valuation appeal, confirm the correct property class, review insurance at renewal, and decide whether to pay any escrow shortage in a single payment.