Is Rental Arbitrage Legal in Arizona?
Allowed, and cities cannot ban short-term rentals. Hosts need an Arizona transaction privilege tax (TPT) license for rentals of fewer than 30 days, and state law lets a city require a limited permit with a fee capped at $250. State law also sets safety, contact, insurance and neighbor-notice rules.
Requirements
- Arizona transaction privilege tax (TPT) license for rentals of fewer than 30 days, filed through AZTaxes.gov
- Any city permit where the city requires one; the city must approve or deny within seven business days
- An emergency contact reachable at any time of day
- Written notice to adjacent neighbors before the first rental
- At least $500,000 in liability coverage, or equivalent marketplace protection
- The permit number or TPT license number on every advertisement
- Register the rental with the county assessor; the Department of Revenue says every Arizona county requires it
- Check your city or town for a business license and hotel tax, which can apply on top of the TPT license
Restrictions
- Cities cannot ban short-term rentals or regulate them only because of what they are
- Events, retail, restaurants and banquet use are prohibited at short-term rentals
- Accessory dwelling units approved on or after September 14, 2024 must be owner-occupied
- Civil penalties run up to $500 or one night's rent for a first violation, $1,000 or two nights' rent for a second, and $3,500 or three nights' rent for a third or later; a permit can be suspended for up to 12 months
Taxes and Fees
- Short-term rentals fall under the State Transient Lodging classification (business code 025)
- A booking platform that lists the property is responsible for collecting and remitting the TPT on those bookings
- Hosts who take direct bookings collect and remit the tax themselves
- You must still file a $0 return in months with no rentals, and a seasonal filing option exists
- The owner is ultimately liable for the tax, even when a property manager files
- Cities and towns can add their own hotel taxes, so check with yours
Cities in Arizona
Next Step
Legal is one half of the decision. The other half is whether the deal earns enough to be worth the risk.
Sources
Frequently Asked Questions
- Do Arizona Hosts Need a State License?
- Yes. Short-term rental hosts need an Arizona transaction privilege tax (TPT) license.
- Can Arizona Cities Regulate Short-Term Rentals?
- State law lets cities require a limited short-term rental permit, as Phoenix does. See the Phoenix page.