Rental Basics in Phoenix>Question Details

Gregory Karr, Real Estate Pro in San Francisco, CA

Need advice about rent tax (privilege sales tax). One house in Tolleson and one in Phoenix. Tolleson is 2.5% of rent and Phoenix is 2%. Is a?

Asked by Gregory Karr, San Francisco, CA Tue Apr 24, 2012

license needed for each house? AZ state dose not charge the tax for residential rental houses and don't see anything that Tolleson does. Is the tax due for the Tolleson house? The Phoenix tax would be sent to the Finance Dept? Where would the Tolleson tax be sent if there is one? Any other info would be appreciated. Thank you. If you know about this topic and the answer is too long... email me with your phone number and I'll call.

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Melissa K Schwartz’s answer
If the property is managed by a property manager, then they MUST collect taxes even if you do not own the requisite number of properties for that particular city!
Rental tax is assessed by the City the property is located in and there is NOT a State rental tax. Each city OR the County have taxes for areas within their jurisdiction. The City of Phoenix says you do not pay unless you own more than three residential rental properties ---OR just one commercial unit. Glendale requires both an annual licensing fee ($50) and taxes on each unit beginning with one. The State may be the collecting entity for some of the smaller cities but the tax requirement is listed in the City codes (not state).

As others have stated, the property must be registered in the County as a rental property. When you purchased it, that should have been taken care of at Title. If not, you will need to get that addressed first. You can go online or call the different cities to verify the 'privileged tax' amount for rentals and what registration fees for each city (if required). Your accountant/CPA should be able to pull this data for you as well. IF you are using a property manager, this should be included in their services to you as well.
0 votes Thank Flag Link Fri Oct 12, 2012
One more point. Some Cities require you also have a City Business Licence as well to be a landlord. Talk to your property manager, Arizona real estate accountant and call the City involved to see what their specific laws require as regards business licenses.
0 votes Thank Flag Link Tue Apr 24, 2012
We don't have the whole story yet. It can be a little more complicated. I just assumed that living out of state you were using a property manager. Here is more detail.

First, You must register the property with the County Assessor’s office as a rental property. Failure to do so could result in a daily fine of up to $150.00. Information and forms are available at:
http://www.maricopa.gov/Assessor/Residential_Property_links.aspx

Here is what Surprise says in their website about the exemption at:http://www.surpriseaz.gov/FAQ.aspx?QID=35&PREVIEW=YES:

"Exemption: If you have less than 2 residential rentals within the State and no commercial rentals, you are not deemed to be in the rental business, and are therefore exempt from the tax. However, if your rental property is rented through a broker or property manager then each property is taxable even if you have less than three properties, and is remitted by the broker or property manager."
0 votes Thank Flag Link Tue Apr 24, 2012
Dear Mr. Karr,

If you own less than three residential rental properties in the state of Arizona you are exempt from paying the rental sales tax in both cities. You mus first register with the county and pay their registration fee for each property and property tax at the landlord rate. "Privilege tax" (rental tax) like Tolleson are collected by the State. Phoenix collects for themselves. Either way we would advise you to get in contact with your accountant or local tax expert. I you or anyone you know needs a realtor please think of us.

Kindest Regards,
Lori Hicks & Toni D'Avello
HomeSmart Realty
(602)375-1075
WeSellAZRealEstate.com
0 votes Thank Flag Link Tue Apr 24, 2012
Mr. Karr,

If you own less than three residential rental properties in the state of Arizona, then you are exempt from paying the rental sales tax in both cities. If you own one commercial property, then you loss this exemption. If you have more than three rentals, then you will need to get a license for both rental properties in both cities. In Phoenix, you can register the rental online here:

https://etaxprd.phoenix.gov/inet/

The city of Tolleson, you will need to call the fiance department to get an application for a sales tax license.

My company does property management and we can handle the sale taxes on your rentals so that you can concentrate on more important things. Our property management fees are affordable and you just collect a check each month. Please give me a call if you would like to learn more about our services.

Sean Heideman, Broker
Position Realty
Office: 480-213-5251
sean.heideman@positionrealty.com
0 votes Thank Flag Link Tue Apr 24, 2012
You should be able to get links to answers here:
http://centralazhomes.com/az-investor-resources-forms-and-he…

First, you must register with the county and pay their registration fee for each property and property tax at the landlord rate.
Second, some city's "Privilege tax" (rental tax) like Tolleson are collected by the State. Other Cities like Phoenix do their own collection. You can get specifics at the above link for the different Cities.

Loren Hoboy-Realtor
Central AZ Real Estate
Your Local Expert
623-688-0004
LHoboy@centralAZhomes.com
0 votes Thank Flag Link Tue Apr 24, 2012
I am experienced in Phoenix, but do not know much about Tolleson. If you used an agent when buying this property he should be able to sit down to go over all those details for each area with you. On either case I advise you to get in contact with an accountant or local tax expert – real estate agents might have general knowledge, but to be on the safe side it is a good idea to talk with an expert.
0 votes Thank Flag Link Tue Apr 24, 2012
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