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Learn about your tax liabilities if you rent out your home or other lodging spaces in Arizona


 Are you planning on renting out your home or other lodging spaces in Arizona this season? The Arizona Department of Revenue (ADOR) wants to remind property owners that they are required to obtain a transaction privilege tax (TPT) license and file and pay taxes with ADOR for any short-term rentals or residential rental activity in cities or towns that levy TPT.

Property owners who rent out residences for periods of less than 30 days, must have a TPT license and report and remit TPT for the state, county, and city. The business code 025 (transient lodging) is used to report lodging bookings for less than 30 days for the state/county and business code 044 (hotel/motel) is used to report these types of transactions for the cities. For those cities with an additional hotel tax, business code 144 is used.

For stays of 30 or more consecutive days, residential rental is considered lodging. This business classification is taxed by the city/town and collected by the state but not taxed at the state level. To determine if a city tax license is required, taxpayers can use the Residential Rental Licensing Matrix.

Property management companies are also reminded to ensure that their clients are properly licensed for TPT. Property management companies do not need a TPT license for filing residential rental TPT on behalf of their clients; instead, they need a PMC license. Property management companies that own taxable rental properties must maintain a separate TPT license.

If using an online lodging marketplace (OLM), the owner/operator or property manager should report income using the business codes as outlined above for reporting according to where the property is located. However, 100% of the income received from the OLM should be deducted using deduction code 775. The OLM is responsible for collecting and remitting the TPT due from the rental income.

The ADOR offers workshops and online tutorials for property managers and property owners to understand the requirements fully. To file and pay taxes online, register for an account at www.AZTaxes.gov. Remember, submitting documents without payment generates a bill, so it's recommended to remit forms with all applicable fees/payments.

NOTE: San Tan Valley does not have a rental tax for residential or commercial properties.  When filing for your TPT, select Arizona (state) and Pinal County (county) as your taxing authorities.

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Saturday, 13 July 2024

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