Arizona rental property owners have been sending letters to residents over the last several months alerting them to an important cost-saving change.
“It’s happening,” Senate President Warren Petersen recently posted on X, with a picture of one such letter. “Renters are (getting) relief from the rental tax repeal passed by the Republican-led Legislature.”
The new law, which went into effect Jan. 1, stops cities from charging sales tax to residential renters. The average savings equates to $472 yearly per renter in Arizona, or $230 million total across the state.
Championed by the Arizona REALTORS and Arizona Multihousing Association, the law will reduce housing costs at a time when it is critically important. .
Prior to the repeal, Arizona and Alaska were the only states in the U.S. that allowed local jurisdictions to impose a tax on individuals simply because they rent their home and do not own it.
Not only did it drive up costs for renters, but the paperwork also was burdensome for property owners.
“It is a regressive tax on our state’s poorest citizens that inhibits their ability to save for a down payment towards purchasing a home and otherwise negatively impacts housing affordability,” the Arizona REALTORS said in a statement. “Furthermore, the tax system used to report and collect the rental tax was inconsistent, error-prone, and confusing. Arizona REALTOR® members who manage properties are ecstatic that they will no longer have to account for, or be blamed for, problematic tax payments.”
A few exceptions to the law exist. Short-term rentals and retail, office and commercial leases will continue to be subject to the tax.
For more information and resources regarding the elimination of sales tax on residential rent – https://www.azmultihousing.org/news/rental-tax-ban-coming-in-2025-what-you-need-to-know
