Many property owners in Arizona offer short-term residential rentals–lodging rental stays for less than 30 days—especially in the winter. Arizona Department of Revenue (ADOR) reminds property owners that the income from short-term rental stays is subject to Arizona transaction privilege tax (TPT).
“If a property owner is only renting their residence for an event, they will need a seasonal Arizona TPT license. They may also need a business license for the city where the residence is located, which is different from a TPT License… contact the specific city for the business license, as the Arizona Department of Revenue does not issue city business licenses. A seasonal TPT license is obtained from the Department’s website, AZTaxes.gov, and choosing the seasonal filing frequency option on the application. The license should be active for the month of the event (the TPT return would be due the following month) or the length of renting the home. This license will be active until it is canceled. In addition, a property owner/operator is required to include the TPT license number on any advertising associated with the short-term rental.”
You will need to use the correct code(s) to report these bookings. The owner/operator or property manager of the short-term rental that takes bookings directly should use:
- Business code 025 to report lodging bookings for less than 30 days for the state/county.
- For the cities, use cod 044 for Hotels.
- Some cities impose an additional hotel tax; use business code 144 to report the additional hotel for those cities. See the Arizona Department of Revenue’s Tax Rate Table for more information on which city has an additional hotel rate.
An owner/operator or property manager of a short-term rental that utilizes an online lodging marketplace (OLM) should report income using the business codes as outlined above for reporting to the state/county and the city 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. For more information, see the OLM Factsheet.
After an event, owners who will not continue in the short-term rental business should cancel their seasonal TPT license.
If you are considering renting your property on a short-term basis, for Rodeo, Gem Show, or another event, be advised of these requirements and ask your R&A advisor for guidance to be sure you are in compliance.