Chandler Commercial Mortgage: What Arizona Changes About the Loan

By Michael McGovern, Founder | 25+ Years in Commercial LendingCommercial Mortgage Connection · Lending in all 50 states Published 25 September 2026 · Facts verified 25 September 2026

The 5 percent cap, and the four things that break it

Arizona taxes real property on its limited property value, not on what it would sell for. Since Proposition 117 took effect in the 2015 tax year, that limited value may rise no more than 5 percent over the previous year, and the Arizona Constitution applies the limit to every property tax on the parcel. Section 42-13301 of the Arizona Revised Statutes puts it in one line: the limited property value is the limited property value of the preceding year plus five percent of that value.

What makes this useful to a buyer is what is not on the list of exceptions. Section 42-13302 sets out when the limited value is instead reset to the level of comparable properties: property left off the roll, a change in the physical use of the property, construction or demolition worth 15 percent or more of the full cash value, a parcel split or combined between 1 January and 30 September, or the loss of a valuation exemption. A sale is not on that list. The cap you buy is the cap you keep.

California runs the other way. A sale there resets the taxable value to the purchase price, and a supplemental bill for the difference follows within months of closing. Our Anaheim commercial mortgage guide works through what that does to a loan on the day you buy.

The second moving part is the assessment ratio, the share of limited value that is actually taxed. For class one property, which includes commercial and industrial buildings, section 42-15001 sets it at 16 percent for the 2025 tax year, 15.5 percent for 2026, and 15 percent from the 2027 tax year onward. On a $4,000,000 limited value that takes the assessed value from $640,000 to $600,000 over two years before any rate is applied. It is a small tailwind, and it is one an underwriter will let you count because it is written into the statute.

Valued a year ahead: your 2027 number already exists

Maricopa County runs its valuation a full year ahead of the tax year. The Notice of Valuation for the 2027 tax year was mailed on 20 February 2026, and the deadline to appeal it was 21 April 2026, sixty days after the mailing. Both dates come from the Assessor. If you are looking at a Chandler property in the second half of 2026, the 2027 taxable value has already been set, and the window to argue with it has already closed for this cycle.

For a buyer that is good news dressed as bad news. Ask the seller for the 2027 notice. It shows the full cash value, the limited property value and the legal class side by side, and it removes a guess from your pro forma. If the seller did not appeal and the full cash value looks high, the next appeal window is early 2027, for the 2028 tax year, and the notice will again be mailed in February with sixty days to respond.

The notice also tells you whether a reset is coming. If the limited value sits well below full cash value, the cap has been doing its work, and a renovation large enough to trigger section 42-13302 will close that gap in one step. Price the improvements against the tax they will bring with them.

The 1.5 percent Chandler charges on commercial rent

Arizona cities tax the business of renting commercial real estate through the transaction privilege tax, and the City of Chandler sets its rate at 1.5 percent of gross rental income. The city page is specific about what gross means. It includes property tax paid by tenants, common area fees, non-refundable deposits and utility charges unless they are separately metered and passed through. In a triple net building, the reimbursements you collect for taxes and maintenance are taxed alongside the rent.

Two more lines from the same page matter to a lender. The lessor is personally liable for the tax whether or not it was charged to the tenant, and the return must be filed even in a month with no income. Underwriters treat the tax as an operating cost unless the leases say the tenant bears it, and they will ask to see that clause rather than take it on trust.

Here is the scale of it. A building collecting $780,000 of base rent and $180,000 of tax and common area reimbursements has $960,000 of taxable gross, and $14,400 of city tax a year. If the leases do not push that to the tenants, it is an owner expense, and at 1.25x coverage on an example 7.00% rate with a 25-year amortization it is worth roughly $136,000 of loan capacity. That is the difference between a lease that says the tenant pays all taxes and one that lists them.

Chandler apartment loans after the rental tax repeal

Chandler apartment loans are the second most common request we see from this market, and Arizona gave multifamily owners a structural change in 2025. Laws 2023, Chapter 204 provides that a city, town or other taxing jurisdiction may not levy a transaction privilege, sales, gross receipts or similar tax on the business of renting or leasing real property for residential purposes. It took effect on 1 January 2025. The same law required landlords to stop charging tenants the amount of the repealed tax, and that requirement is itself repealed after 31 December 2026.

For an underwriter this shows up in the trailing statements. A twelve month operating statement that straddles the end of 2024 has a tax line that disappears partway through, and gross collections that may have stepped down by the same amount if the tax was itemised. Normalise both before you compare years, and expect the lender to do the same. From 2027 the pass-through requirement falls away, which affects how rents are quoted, not whether the city can tax them.

The rest of the multifamily file reads like the rest of the country, with one Arizona addition. Rents are unregulated, so the rent roll is tested against recent signed leases and the concessions behind them. Property tax runs on the limited value, so a stabilized building has a tax line the lender can forecast for the whole term. We have written before about how an agency lender sized a 60-unit Phoenix acquisition, and the mechanics are the same in Chandler.

What the numbers do to a loan

Here is the cap arithmetic on a value-add plan. Take a Chandler flex building with a 2026 limited property value of $3,800,000 and a full cash value of $5,200,000. In an ordinary year the 2027 limited value can rise to $3,990,000, and at the 2027 ratio of 15 percent the assessed value is $598,500. Now suppose the buyer spends $900,000 on improvements, which is more than 15 percent of the full cash value, and the Assessor resets the limited value toward comparable property. If it lands at $4,700,000, an assumption for this example, the assessed value becomes $705,000, a rise of $106,500.

Take the actual combined rate from the most recent Maricopa County tax statement for the parcel, because it depends on the school district and the special districts the property sits in, and the reset level depends on what the Assessor finds comparable. The point of the example is the direction: a renovation that lifts rents also lifts the tax line in the same year, and the loan has to carry both.

The rent tax works the other way round. It is fixed at 1.5 percent of gross, so it grows with every rent increase and every reimbursement you collect. On the $960,000 example above, a 4 percent rent increase adds about $576 of city tax a year. Small on its own, and worth writing into the lease as a tenant charge from day one.

How a Chandler commercial mortgage gets sized

Two tests run at the same time and the lower answer wins. Debt service coverage asks whether net operating income comfortably exceeds the annual payments, most often at a minimum of 1.25x. Loan-to-value caps the loan against the appraised value, commonly 65 to 80 percent depending on the property and the program.

A plain example. Say a Chandler property nets $330,000 a year after real Arizona expenses, including the 2027 tax on the limited value from the notice and the 1.5 percent rent tax where the leases leave it with the owner. At 1.25x coverage, annual debt service can be no more than $264,000, which is $22,000 a month. At an example 7.00% rate on a 25-year amortization, that payment supports a loan of roughly $3,113,000. Against a $4,600,000 price that is about 68 percent, so coverage sets the ceiling before the leverage cap does. The rate is an illustration, not a quote.

Our guide to the loan-to-value ratio on apartment loans covers the second test in detail, and the commercial mortgage rates page explains how pricing and term interact.

Loan options for a Chandler property

Most Chandler requests land with one of five kinds of lender. Which one fits depends on the property type, its condition and how long you intend to hold it.

For apartment programs compare the options on our apartment building loans page, or the broader commercial mortgage overview for retail, office and industrial.

What an Arizona lender will ask you for

A complete package moves faster than a strong one that arrives in pieces. For a Chandler property, expect this list.

• The 2027 Notice of Valuation from the Maricopa County Assessor, showing full cash value, limited property value and legal class. This is the single most useful document in an Arizona file.
• The last two tax statements from the County Treasurer, so the lender can read the actual combined rate rather than estimate it.
• The renovation budget, if there is one, against the full cash value, so everyone knows whether the 15 percent reset threshold is in play.
• The transaction privilege tax licence and the last twelve months of returns, plus the lease clause that says who bears the 1.5 percent.
• Rent roll and trailing 12 months of income and expenses, normalised for the residential rent tax that ended on 1 January 2025 if the building has apartments.
• Property condition and environmental reports as the lender requires them.
• Borrower package: schedule of real estate owned, net worth and liquidity after closing, and credit for every key principal.

When a Chandler deal does not pencil

Some files should not be forced. If the numbers only work using the current limited value and fail once the renovation resets it, the plan is underpriced, not the loan. If the rent tax has been sitting in the seller's expenses because the leases never passed it on, do not assume your leases will, until they do. If there is no cash left after closing, wait, because a reset shows up on a tax statement in the first year.

The fix is usually one of three: a lower price, a partner who brings liquidity, or a bridge loan with a written refinance plan that is sized on the tax line after the reset rather than before it.

The goal is not simply to close a Chandler commercial mortgage. It is to close one the property can still carry after the Assessor has caught up with the improvements and the leases have turned over once. For how the same conversation runs in a market where the tax cap is about to expire, see our Carrollton commercial mortgage guide; for a regulated rent market, the NYC commercial mortgage page; and for a file where insurance is the swing line, Orlando.

Chandler commercial mortgage FAQ

Does buying a Chandler property reset its property tax?

No. Arizona taxes the limited property value, which may rise no more than 5 percent a year, and a sale is not one of the events that resets it. The resets in section 42-13302 are a change in physical use, construction or demolition worth 15 percent or more of full cash value, a parcel split or consolidation, property omitted from the roll, or a lost exemption. Buy a building and the cap comes with it.

Can I still appeal the 2027 valuation?

Not in this cycle. The Maricopa County Assessor mailed the 2027 Notice of Valuation on 20 February 2026 and the appeal deadline was 21 April 2026, sixty days later. The next notice, for the 2028 tax year, is due in February 2027 with the same sixty day window. Ask the seller for the 2027 notice now so the number in your underwriting is the number on next year's bill.

Is commercial rent taxed in Chandler?

Yes. The City of Chandler charges transaction privilege tax at 1.5 percent of gross rental income on commercial real property, and gross includes property tax paid by tenants, common area fees and non-refundable deposits. The lessor is personally liable whether or not the tax was passed on, so lenders read the lease to see who bears it.

Is residential rent taxed in Chandler?

Not since 1 January 2025. Laws 2023, Chapter 204 prohibits any Arizona city, town or other taxing jurisdiction from levying a transaction privilege or similar tax on the business of renting real property for residential purposes. The related requirement that landlords stop charging tenants the repealed amount is itself repealed after 31 December 2026.

Do I need a lender based in Phoenix or Chandler?

No. A commercial loan is decided on the numbers of the property and the strength of the borrower, and lenders across the country finance Maricopa County property every week. What matters is that the lender reads the limited value, the assessment ratio and the rent tax correctly, and prices a renovation against the reset it will trigger. A broker with a national lender network can compare local banks against agency and portfolio options side by side.

Sources

• Arizona Revised Statutes, section 42-13301, Limited property value. The limited property value is the preceding year's limited value plus five percent. Checked 25 September 2026.
• Arizona Revised Statutes, section 42-13302, Determining limited property value in cases of omissions and changes. The events that reset limited value: omitted property, change in physical use, construction or demolition of 15 percent or more of full cash value, splits and consolidations, and lost exemptions. Checked 25 September 2026.
• Arizona Revised Statutes, section 42-15001, Assessed valuation of class one property. Sixteen percent through 31 December 2025, fifteen and one-half percent through 31 December 2026, fifteen percent from and after 31 December 2026. Checked 25 September 2026.
• Arizona Legislative Council, Analysis of Proposition 117. The 5 percent annual limit on the value used to calculate property taxes, beginning with the 2015 tax year. Checked 25 September 2026.
• Laws 2023, Chapter 204 (Senate Bill 1131). Prohibition on city and town taxes on residential rental from 1 January 2025; landlord requirement to stop charging the repealed tax, repealed after 31 December 2026. Checked 25 September 2026.
• Maricopa County Assessor, Appeals. The 2027 Notice of Valuation was sent 20 February 2026; the deadline to appeal real property was 21 April 2026. Checked 25 September 2026.
• City of Chandler, Rental Properties Tax Information. Tax rate of 1.5 percent of gross rental income on commercial real property, what counts as taxable income, and lessor liability. Checked 25 September 2026.
• Fannie Mae Multifamily, Small Mortgage Loan Program Term Sheet. Loan amount, term, maximum LTV and minimum DSCR. Checked 22 September 2026.
• US Department of Housing and Urban Development, Descriptions of Multifamily Programs, Section 207/223(f). Mortgages up to 35 years, 83.3% of value for market-rate projects, and the requirement that the property was completed or substantially rehabilitated at least 3 years before application. Checked 24 September 2026.

Michael McGovernFounder, Commercial Mortgage Connection. Michael wrote and reviewed this guide drawing on a career that began at Bear Stearns & Co. in 1997, ran through structuring billions of dollars in CMBS and MBS in the F.A.S.T. group at Bear, and selling mortgage product at Lehman Brothers, and now spans more than $1 billion in originated mortgages.

Facts on this page were verified against the cited Arizona, Maricopa County, City of Chandler, Fannie Mae and HUD sources on 25 September 2026. Tax rules, valuation practice, program limits and lender appetite change, and the example rate and figures on this page are illustrations, not offers or quotes. Nothing on this page is a loan offer, a rate quote, legal, tax or insurance advice, or personalized financial advice; all financing is subject to lender approval, credit review and property underwriting, and no approval is guaranteed. Broker licensing and closing rules vary by state. Commercial Mortgage Connection is a commercial mortgage brokerage, is paid when loans close, and sells the service described on this page. Equal Housing Opportunity.