This year’s Super Bowl will be held at State Farm Stadium in Glendale, Arizona. For local residents, this year’s venue provides an opportunity to earn some passive income if they decide to rent their home to arriving fans.
Numerous states and local taxing jurisdictions impose varying forms of an indirect tax on short-term rentals, which are typically defined as rentals for less than 15 days, and Arizona is one of them.
“The best defense is an even better offense.”
avoid the blitz
Although the opportunity to rent your house for a short-term rental may seem like a quarterback draw, remember to check the official rulebook of the Arizona Department of Revenue (Department) and your county and city offices to avoid the imposition of unwanted penalties due to noncompliance.
For those so inclined to rent their house, the Department has provided general guidance as well as links to relevant statutes and regulations. Specifically, the Department’s website states, “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.”
However, the Department’s guidance continues, “[s]hort-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 … and the Model City Tax Code (MCTC) …”
A DOWN BUT NOT OUT
Similar to other types of indirect tax filing requirements, if you do not actually rent your house but went through the compliance process and are active and registered, a transaction privilege tax (TPT) zero return is likely due.
PENALTIES
If a return is required to be filed but is not, penalties will be imposed, and not the type that can be deferred or added onto another reporting period.
OFFICIAL RULING
Have a short bench? Libertas can assist from the sideline as your Offensive Coordinator. When it is game time, consider us your go to 12th man.