Residential Rental for Individuals
Residential Rental is the rental of real property for a period of 30 or more consecutive days for residential purposes only and not commercial. Residential rental properties are also subject to tax, known as transaction privilege tax (TPT), and imposed when engaged in business under the residential rental classification by the Model City Tax Code. Some cities, not all, opt to tax residential rental income.
TPT is imposed when renters or property management companies engage in business under the residential rental classification by the Model City Tax Code. Individual owners of taxable rental properties are required by law to obtain a TPT license with ADOR regardless if the owners rent the property themselves or employ a property management company (PMC). A license is only required for cities that impose a tax on residential rental activity. To determine if a city tax license is required, taxpayers can use the Residential Rental Licensing Matrix.
All payments made by the tenant or on behalf of the landlord are taxable.
See the following list. (This list is not inclusive.)
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
Workshops
ADOR offers workshops dedicated for property owners and property management companies. Check out the next event here.
For more information and resources on residential rentals, visit the following links:
- For Property Owners
- For Property Management Companies (PMC)
- TPT Due Dates
- Transaction Privilege Tax – Residential Rental (Publication 645)
- Download Transient Lodging in Arizona Card (PDF)
- Download Residential Rental Resources and Information Card (PDF)
- Learn About Tax Changes at Cities and Towns
If you need further assistance, please call (602)716-RENT(7368), or email [email protected].
You can register, file and pay online at www.AZTaxes.gov. It is fast and secure.
Note: Pursuant to A.R.S. § 42-6013, ADOR has developed a new consolidated return that separately identifies the gross income and deductions for each owner’s property location.
