Arizona voters approved Proposition 207 (adult use marijuana) in the 2020 General Election. For more information, click here.

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What Residential Rental Income is Taxable?

All payments made by a tenant, or on behalf of a landlord, are taxable. Please see the list below, and note that it 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 Tenant

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

Individual owners of taxable rental properties are required by law to obtain a transaction privilege tax (TPT) license with the Arizona Department of Revenue (ADOR), regardless if the owner rents the property themselves or employs a property management company (PMC). A license is only required for cities that impose a tax on residential rental activity.