ADOR Announces Residential Rental Tax Changes
ADOR Announces Residential Rental Tax Changes
Below, find information from our friends at the Arizona Department of Revenue related to the elimination of TPT for residential rental real estate.
In December 2024, ADOR announced the elimination of transaction privilege tax (TPT) applicable to the rental of real estate for residential purposes (residential rental) as of January 1, 2025. A.R.S. § 42-6004 (H) was amended to exempt residential rental TPT from being levied. Residential rental TPT is reported and collected under business code 045 for long-term lodging stays of 30 days or more.
Next Steps for Property Owners
Owners should continue to collect, file, and pay residential rental TPT for periods through December 31, 2024, filed in January 2025. For periods beginning January 1, 2025 and thereafter, individuals should discontinue collecting residential rental TPT.
TPT licenses that only have residential rental (business code 045) on their account have been automatically canceled effective December 31, 2024. However, property owners are still able to file for periods prior to January 1, 2025. The TPT license (residential rental only) will not be renewed for the 2025 calendar year. If the business has other business activity on the same license, instead the residential rental location will be closed. No further action or steps need to be taken to cancel the license or close the location.
Be aware that cancelation of your license will not exempt you from any liabilities related to periods before January 1, 2025. If liabilities are unpaid, enforcement actions may be taken against you. For businesses that cannot afford to pay their tax liability in full, ADOR offers options to help make payments through Collections.
For more information on this change and frequency asked questions, please visit azdor.gov/business/residential-rental.
As it relates to the Arizona Department of Real Estate, property managers must understand a lease agreement that previously permitted collection of money for this tax may not continue to collect the funds as an administrative fee or additional rent without modification to the contract. Any modification to the lease agreement would require consent from all parties to the agreement.
