AZ Residential Rental Tax Changes
Starting January 1, 2025, residential rental property owners should no longer collect and remit any city transaction privilege tax (TPT) on the income derived from long-term lodging stays of 30 days or more to ADOR. (Laws 2023, Chapter 204 and A.R.S. § 42-6004 (H)).
This applies to licensees that are registered and have filed using business code 045 indicating that license is engaged in the business classification of residential rental. Residential rental is the rental of real property for a period of 30 or more consecutive days for residential (i.e. noncommercial) purposes only.
Currently, there is no state or county tax imposed on residential rentals, and the upcoming change to the AZ tax law will eliminate the city TPT. While there will no longer be a city TPT obligation beginning January 1, 2025, you must still register the property with the county assessor to comply with landlord tenant laws and other compliance requirements from government entities. For tax periods before January 1, 2025:
- You must still comply with filing and payment requirements, and
- These periods remain subject to audit as allowed by statute.
Please note: Hotel, motel, or other transient lodging businesses that book stays for fewer than 30 days must still collect and remit TPT under the transient lodging or hotel classification.
If a licensee is not engaged in any other business activity and is only using business code 045 (rental of residential real property for a period of 30 or more consecutive days), the license should be canceled by marking “Close Your Account” on www.AZTaxes.gov or “Final Return” on Form TPT-EZ on the last return of the year, i.e., December 2024 activity filed in January 2025. For 2025 license renewals, ADOR will not renew licenses for taxpayers that are only registered and file returns for residential rental.
Be aware that cancellation of the license will not exempt the licensee from previous tax liabilities or taxes that have not been reported. If liabilities are unpaid, enforcement actions may be taken.
AZ Residential Rental Tax Change
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* Image from The Curve at Melrose Apartments in Phoenix
