30 Days or More

Notice of Upcoming Residential Rental Tax Changes

Effective Jan. 1, 2025 the City of Tempe will no longer impose Transaction Privilege Tax (TPT) on income received from residential rentals with stays of 30 days or more also known as long-term rentals (business code: 45).

Rents received for periods December 2024 and prior remain taxable, including unlicensed properties and/or returns that may not have been filed and/or paid.  The December 2024 reporting period (Due Jan. 20, 2025) is still required to be filed and paid.

Short-term rentals (less than 30 days) and commercial leases are not impacted and remain taxable.

Please refer to the Arizona Department of Revenue for further details.

Residential Rental is the rental of real property for a period of 30 or more consecutive days for residential purposes only and not commercial purposes.

• All residential rental properties in Tempe are taxable
• All owners are required to obtain a Transaction Privilege Tax (TPT) license

Residential Rentals include:

• Single Family Homes
• Condominiums
• Vacation Homes
• Duplexes
• Triplexes
• Fourplexes
• Apartments
• Room Rentals

All payments made by the tenant or on behalf of the landlord are taxable.

Examples:

Common income sources:

• Rent
• Non-refundable and forfeited deposits
• Late payment fees
• Pet fees
• Federal rent subsidies (HUD)

Fees passed on to the tenant:

• Common area fees
• Maintenance charges
• Homeowner association fees
• Landscaper maintenance
• Property tax
• Pool Service
• Repairs and/or improvements

 Transaction Privilege Tax

1.8% Paid Via AZTaxes.gov to Region Code: TE (Tempe); Business Code: 45

There is no State or County Tax for the Residential Rental Classification

Code

Tempe City Code § 16-445

Residential Rental Taxability in All Arizona Cities

Residential Rental Licensing Matrix

A commercial property rental or a commercial lease is real property leased or rented for commercial purposes. This includes but is not limited to: office buildings, stores, factories, farm land, parking/storage facilities, banquet halls or meeting rooms. These leases are subject to county and city transaction privilege taxes.

• All commercial property rentals in Tempe and Maricopa County are taxable
• All owners are required to obtain a Transaction Privilege Tax (TPT) license

Commercial Property Rental and Commercial Leases include:

• Office buildings
• Stores
• Factories
• Warehouses
• Farm Land
• Parking facilities
• Storage facilities
• Banquet Halls
• Meeting Rooms

Transaction Privilege Tax 

1.8% Paid Via AZTaxes.gov to Region Code: TE (Tempe) ; Business Code: 213

0.5% Paid Via AZTaxes.gov to Region Code MAR (Maricopa County);              Business Code 13

There is no State Tax for the Commercial Lease Classification.

NOTE: 5 Counties in Arizona tax this classification

Maricopa: 0.5%

Coconino: 0.3%

Gila: 0.5%

Pima: 0.5%

Pinal: 0.5%

 Less Than 30 Days

Short-Term Residential Rental is the rental of real property for a period of less than 30 days for residential purposes only and not commercial purposes.

• All short-term residential rental property owners must obtain a Tempe Short-Term Rental License for each rental unit.
• Register rental property with Maricopa County Assessor
• All short-term residential rental properties in Tempe are taxable
• All owners are required to obtain a Transaction Privilege Tax (TPT) license

Short-Term Rentals, properties rented for less than 30 days, are:

• also Vacation Rentals
• single-family homes
• apartments
• condominiums
• rooms for rent
• corporate housing
• subject to Transaction Privilege Tax(TPT or sales tax)
• an alternative to hotels and motels (but taxed the same)
• commonly advertised on an online marketplace for lodging
• required by law to register with the City of Tempe if property located in Tempe

Transaction Privilege Tax 

Short-Term Residential Rentals are taxed like Hotels for TPT: 

1.8% Paid Via AZTaxes.gov to Region Code: TE (Tempe) ; Business Code: 44

5.0% Paid Via AZTaxes.gov to Region Code: TE (Tempe) ; Business Code: 144

7.27% Paid Via AZTaxes.gov to Region Code MAR (Maricopa County) and State;          Business Code 25

NOTE: An Online Lodging Marketplace (OLM) will collect and pay TPT on your behalf.  Any rentals on your own or direct to the guest must be filed and paid by the property owner.  All TPT licenses are required to file each month even if the liability is $0 either for no gross revenues or because all revenues were paid by the OLM (Deduction Code 775).

Notice of Upcoming Residential Rental Tax Changes

Effective Jan. 1, 2025 the City of Tempe will no longer impose Transaction Privilege Tax (TPT) on income received from residential rentals with stays of 30 days or more also known as long-term rentals (business code: 45).

Rents received for periods December 2024 and prior remain taxable, including unlicensed properties and/or returns that may not have been filed and/or paid.  The December 2024 reporting period (Due Jan. 20, 2025) is still required to be filed and paid.

Short-term rentals (less than 30 days) and commercial leases are not impacted and remain taxable.

Please refer to the Arizona Department of Revenue for further details.

Step One: A Transaction Privilege Tax (TPT or sales tax) License is required annually for each residential rental property located in Tempe whether long-term or short-term rental

Residential Rental is the rental of real property for a period of 30 or more consecutive days for residential purposes only and not commercial. 

Short-Term Residential Rental is the rental of real property for a period of less than 30 days for residential purposes only and not commercial purposes.

Apply, File & Pay Transaction Privilege Tax at AZTaxes.gov

Step Two: Register your Long-Term or Short-Term Residential Rental property with the Maricopa County Assessor.  Click image below to register:

Residential rental property must be registered with the County Assessor according to Arizona law (A.R.S. § 33-1902)

Step Three: Owners and Property Management Companies (PMC's) must file each month at AZTaxes.gov whether $0 gross revenue or if the property receives gross revenue.  Gross revenues are required by law to be filed and paid at AZTaxes.gov.

Step Four: If the property is rented for LESS THAN 30 DAYS as a short-term rental or vacation rental, you are required per Tempe City Code to obtain an Annual Tempe Short-Term Rental License.

Code

Tempe City Code § 16-445

Residential Rental Taxability in All Arizona Cities

Residential Rental Licensing Matrix

Property Management Companies 

Property Management Companies(PMC's) are commonly a third party company that acts in fiduciary capacity on behalf of the owners of real estate.  Property manager responsibilities include day-to-day operations of the real estate, from screening tenants to arranging for repairs and maintenance. Owners pay property managers a fee or a percentage of the rent generated by the property.

1) PMC's Are Required To Register With The Arizona Department of Revenue per A.R.S § 42-5005(M) To File & Pay Transaction Privilege Tax(TPT) On Behalf Of The Property Owner

Form 11348 - Property Management License Application & Memorandum of Understanding

Property Management Companies (PMC) can file on behalf of the property owners pursuant to A.R.S § 42-5005(M). Licensure is required for the PMC to act in a fiduciary capacity as the agent of the property owner in accordance with A.R.S § 42-6013.

Property owners must have their own Transaction Privilege Tax license and allow the PMC to file and pay TPT on their behalf.

A PMC filing an electronic consolidated return:

(a) Acts in a fiduciary capacity as the property owners' agent.

(b) Is responsible and accountable to the property owners and to the city or town for fully and accurately reporting and paying to the department the tax and any other amounts due.

(c) Is subject to audit, as provided by law, of the electronic consolidated returns, including data in the licensee's possession that is used in compiling and filing the electronic consolidated returns.

(d) Notwithstanding section 42-1129, subsection A, shall remit the applicable tax in monies that are immediately available to this state on the date of the transfer in accordance with section 42-1129, subsection B.

Property owner(s):

(a) Remains ultimately responsible, accountable and liable for both:

(i) The accuracy of information the property owner furnishes to the licensee.

(ii) The return and payment of the full tax liability, including any penalties prescribed by section 42-1125.

(b) Is subject to audit, as provided by law, of the records in the property owner's possession that are submitted to the licensee for the purposes of the electronic consolidated return.

(c) May withdraw any of the property owner's properties from the electronic consolidated return on thirty days' written notice to the licensee, the department and the tax collector of the city or town.

2) Tempe Residential Long-Term and Short-Term Rental Properties Are Required To Register With The Maricopa County Assessor. Click Image Below:

3) A Transaction Privilege Tax (TPT or sales tax) License is required annually for every single residential rental property located in Tempe whether it is a long-term or short-term rental

Apply, File & Pay Transaction Privilege Tax at AZTaxes.gov

4) What Training Or Assistance Is Available for PMC's?

a. PMC Checklist for PMC Licensing, Filing & Paying - click here

b. PMC Filing & Paying Tutorial

c. Live PMC Workshops

d. ADOR Contact Info:

Property Owners: ResidentialRental@azdor.gov

Property Managers Hotline: 602-716-7368(R-E-N-T)

Property Owners: 602-255-3381 (ask to be transferred to Residential Rental Hotline)

"Our mission is to provide quality service to all Tempe taxpayers, and administer the tax code in a fair and equitable manner."