Arizona Revised Statutes (A.R.S.) §§ 43-1089.02 and 43-1181 provide nonrefundable individual and corporate income tax credits for the donation of real property and improvements to an Arizona school district or Arizona charter school for use as a school or as a site for the construction of a school.
To qualify for the credit:
The real property and improvements must be located in Arizona.
The donor must convey the real property and improvements unencumbered and in fee simple, except that there must be a deed restriction and protective covenant related to the use of the property.
The value of the donated property must be determined by an appraisal as defined in A.R.S. § 32-3601 that is conducted by an independent party and is paid for by the donee.
The conveyance shall not violate the provisions of A.R.S. §§ 15-341(D) or 15-183(U).
The donor must record the appropriate lien on the property donated to an Arizona charter school. The tax credit constitutes a lien on the property. The lien is the amount of the allowable tax credit adjusted by the gross domestic product (GDP) price deflator, as defined in A.R.S. § 41-563, with a maximum of 12.5% over the allowable tax credit.
An Arizona school district shall not accept the donation unless the school facilities board has reviewed the proposed donation and has issued a written determination that the real property and improvements are suitable as a school site or as a school.
On written request of the donee, the donor must disclose in writing to the donee the amount of the allowable tax credit for the property received by the donee. The tax credit is in lieu of a deduction in the computation of Arizona gross income for the donation of the property for which the credit is claimed. CORPORATE TAXPAYERS: An addition to Arizona gross income is required for the amount of the deduction included in the computation of federal taxable income. INDIVIDUAL TAXPAYERS: The taxpayer cannot claim both the tax credit and an itemized deduction for the donation of a school site. If the taxpayer claims the credit and itemizes deductions on the Arizona return, the taxpayer must exclude the amount of the charitable deduction otherwise allowed for the donation of the school site.