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Short-term residential rentals are lodging rental stays for less than 30 days. The income from short-term rental stays is subject to Arizona transaction privilege tax (TPT). See Arizona Revised Statutes (A.R.S.) § 42-5070 and the Model City Tax Code (MCTC) -444 and -447.
If a property owner is only renting their residence for the Super Bowl, 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. Please 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 February (the TPT return would be due in March) or the length of renting the home. This license will be active until it is cancelled. In addition, a property owner/operator is required to include the TPT license number on any advertising associated with the short-term rental.
An owner/operator or property manager of the short-term rental that takes bookings directly should use business code 025 to report lodging bookings for fewer than 30 days for the state/county. The business code used to report these types of transactions for the cities is 044 for Hotels. Some cities impose an additional hotel tax; please 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 uses 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, please see the OLM Factsheet.
After the Big Game, owners who will not continue in the short-term rental business should cancel their seasonal TPT license.
Tuesday, January 10, 2023