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Real Property Rentals

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1. Maricopa County Assessor’s Office Classification

Class 3:  Person lives full-time in his primary residence.

Class 3:  Person owns the home and a qualifying family member lives there.

Class 4.1:  Second home - Person lives somewhere else, but has a house here. Person either does not rent or rents part time.

Class 4.2:  Residential Rental property

2. Fountain Hills Tax Rates

Short-Term rental – rentals of less than 30 days – 13.87%

(Consisting of Fountain Hills 2.6%; Fountain Hills Transient/Bed Tax 4.0%; Maricopa County 7.27%)

Long-Term rental – rentals of 30 or more days – 1.6%

3. Three Things to Do to Become Compliant & Pay Taxes

Step 1: Obtain a Transaction Privilege Tax (TPT) license with the Arizona Department of Revenue. If you have rental income, you must pay taxes on the rent to the Department of Revenue, who forwards the tax collected to the Town of Fountain Hills. Most property owners charge the tenant for the tax on the rental property.

The main phone line:  (602) 255-3381

Information about Transaction Privilege Taxes on residential rentals (602) 716-7368

General questions about the process:

https://azdor.gov/transaction-privilege-tax/residential-rental-guidelines/residential-rental-licensing-requirements

To download the residential rental application:

short-term (less than 30 days)

https://azdor.gov/forms/tpt-forms/joint-tax-application-tpt-license

long-term (30 or more days)
https://azdor.gov/forms/tpt-forms/residential-rentals-only-application

Once you have received your Transaction Privilege Tax license, the Department of Revenue will send you the forms you need to fill out with instructions. You may also file and pay taxes online. For more information, contact the Department of Revenue.

Step 2: Register as a Residential Rental with the Maricopa County Assessor's Office.

When you rent a residence in Maricopa County, you must register as Class 4.2 - Residential Rental.

Phone number:  (602) 506-3406

Email address:  pubasst@mail.maricopa.gov

Online:  You can check to see if you are already registered as a class 4 Residential Rental by entering your address or assessor’s parcel number here:  https://mcassessor.maricopa.gov/

General questions about the process:  https://mcassessor.maricopa.gov/help/register-a-rental.php

To download the application:  https://mcassessor.maricopa.gov/static/docs/Residential-Rental-Property-Registration.pdf

Step 3: Fill out the online form on the Town of Fountain Hills website

Go to https://www.fh.az.gov/rentals
Phone:  (480) 397-2482
Email:  RentalTax@fh.az.gov

Once you begin paying taxes, you will be compliant with the Town of Fountain Hills. The Town of Fountain Hills will cease its efforts to ensure compliance if transaction privilege taxes are paid regularly.

4. I want to be compliant, what do I do?

The Town of Fountain Hills requires all rental properties to pay the rental tax. Please follow the steps to become compliant. The three steps are:

• Step 1: Obtain a Transaction Privilege Tax license with the Arizona Department of Revenue.
• Step 2: Register as a Residential Rental with the Maricopa County Assessor's Office
• Step 3: Fill out the online form on the Town of Fountain Hills website

See FAQ “Three Things to Do to Become Compliant & Pay Taxes”.

5. I did not know I had to pay the rental tax.

All rental properties are required to pay the tax.

6. I do not know why I got a letter from the Town. I am scared and confused and do not know what to do.

The Town of Fountain Hills requires all rental properties to pay the rental tax. Please follow the steps to become compliant. The three steps are:

• Step 1: Obtain a Transaction Privilege Tax license with the Arizona Department of Revenue
• Step 2: Register as a Residential Rental with the Maricopa County Assessor's Office
• Step 3: Fill out the online form on the Town of Fountain Hills website

See FAQ “Three Things to Do to Become Compliant & Pay Taxes”.

7. I have a rental condominium in Fountain Hills. I did not know anything about this.

The Town of Fountain Hills requires all rental properties to pay the rental tax. Please follow the steps to become compliant. The three steps are:

• Step 1: Obtain a Transaction Privilege Tax license with the Arizona Department of Revenue
• Step 2: Register as a Residential Rental with the Maricopa County Assessor's Office
• Step 3: Fill out the online form on the Town of Fountain Hills website

See FAQ “Three Things to Do to Become Compliant & Pay Taxes”.

8. I pay state taxes every year. Is this not that tax?

This is a sales tax on rental income similar to what you are charged on purchases at Target. If you are charging your tenant taxes on their rent, you just send in the tax they pay. If you do not charge your tenant tax, you will have to pay the taxes.

9. I do not make any money on my rentals. Why must I pay tax?

All rental properties are subject to the rental tax. If you charge your tenants the tax, you will not have to pay the tax from your own funds.

10. To whom do I pay the tax?

You pay the Arizona Department of Revenue. The Department of Revenue will forward the money to the Town of Fountain Hills.

11. I only rent out my property for two weeks per year. Do I owe taxes?

You owe tax on all rental income.

12. I do not have access to a computer.

You will need to call the Maricopa County Assessor’s Office and the Arizona Department of Revenue. The phone number for Maricopa County Assessor’s Office is (602) 506-3406 and the number for Arizona Department of Revenue is (602) 716-7368. Both agencies have people specifically dedicated for these questions.

13. I already have a Transaction Privilege Tax (TPT) license.

Please provide us with the Transaction Privilege Tax license number by filling out the form online at https://www.fh.az.gov/rentals.

14. Only family lives there. The property has not been rented for 6-10 years. I do not know what to do.

If they are a qualifying family member and are paying rent, taxes are still due. However, they can be classified by Maricopa County Assessor’s Office as a Primary Residence with a Qualified Family Member. Read more at this link https://mcassessor.maricopa.gov/faq/faq-rental-registration.php.

15. I have a neighbor that put their house up for rent and I want to make sure they pay their fair share.

Please notify the Town by calling (480) 397-2482 or emailing at rentaltax@fh.az.gov. We will be unable to share their status with you, but the Town of Fountain Hills will follow up.

16. How do I get a Transaction Privilege Tax (TPT) license?

Go online to http://www.azdor.gov and apply for a license. Alternatively, you can print the online form, fill it out and mail it in. Make sure you enclose a check for the city fee per property and the state license fee, if appropriate.

17. I rent my home through Airbnb. Do I owe taxes?

Airbnb charges your renter and remits those taxes to the Arizona Department of Revenue on your behalf. However, you still must follow all the steps to become compliant. It is the property owner’s responsibility to report the taxes paid to the Arizona Department of Revenue on the Transaction Privilege Tax TPT-EZ or TPT-2 forms.

18. What is my liability for Transaction Privilege Tax (TPT) taxes? Tell me what I must pay, and I will send the Town of Fountain Hills a check.

The Transaction Privilege Tax is self‐reporting. This means that you fill out the Transaction Privilege Tax form required by the Arizona Department of Revenue. This form helps you calculate your Transaction Privilege Taxes due. Once you calculate the correct taxes due, you will send payment to the Arizona Department of Revenue, who will forward to the Town of Fountain Hills. To start, first obtain a Transaction Privilege Tax license and the Arizona Department of Revenue will send the forms needed to begin reporting and paying taxes.

19. I have not started renting out my property. It is up for rent though. Do I pay taxes?

The Town of Fountain Hills requires all rental properties to pay the rental tax. You only pay taxes on rental income. Please obtain a Transaction Privilege Tax license while you wait for the property to be rented.

20. I only rent my property for two months out of the year. Do I have to register with the Maricopa County Assessor’s Office as a residential rental?

"Residential rental property" means property that is used as leased or rented property for residential purposes. However, it is better to register it this way now, since if you start renting it full time in the future, you may not remember to change your property class to a residential rental. There are stringent penalties for not registering your property correctly.

21. I do not have a rental, never have, never will.

Please notify the Town so we can remove your name from our list of potential rental properties. The Town will first research why your name was put on the list. If an ad was placed for your property, your property address will stay in the database for one year, unless you are a new owner.

22. I used to rent my property but do not anymore. Take me off your list.

Please provide the Town with your information, specifically telephone number, email address, property address, full name, Assessor’s Parcel Number (APN) or parcel number, when last rented, your Transaction Privilege Tax license number, and if you are compliant with the Maricopa County Assessor’s Office (no longer a class 4.2). Upon verification, the Town will remove your property from our list of potential rental properties.

23. Your letter was mailed to the wrong address. Here is the new address.

Please correct your address with Maricopa County Assessor’s Office. That Office is where we obtained your mailing address.

24. Which properties of mine are not compliant?

The properties for which you have not paid tax. Please provide all the property addresses and unit numbers of your rentals on the Town’s website at https://www.fh.az.gov/rentals.

25. I owe back taxes; how do I get caught up?

Call the Arizona Department of Revenue at (602) 716-7368, who can assist you and explain the correct process.

26. My property manager handles that.

You, as the property owner, still need to have a valid Transaction Privilege Tax license for each location you rent.

27. My accountant handles that.

You are still ultimately responsible to ensure the Transaction Privilege Taxes are being paid. Call and confirm with your accountant to ensure that Transaction Privilege Taxes are being properly filed on your behalf.

28. Is a business license required in the Town of Fountain Hills to own and operate a residential rental?

No.

29. Curious if I need to file for a Transaction Privilege Tax (TPT) license or just send a check?

One must file for and receive a Transaction Privilege Tax license. Then the Arizona Department of Revenue will send you the forms you need to report the income.

30. Do I have to register with Maricopa County Assessor’s Office?

Yes, you must properly register your property with the county. You may call them at (602) 506-3406 or email at pubasst@mail.maricopa.gov. You may also print the form at https://mcassessor.maricopa.gov/static/docs/Residential-Rental-Property-Registration.pdf.

31. Family friend is staying there receiving treatment at Mayo. They are paying rent to cover the mortgage only.

Tax is due on the gross rent. You need to obtain a Transaction Privilege Tax license.  Once you have your Transaction Privilege Tax license, call the Town with Transaction Privilege Tax license number so we can update our records.

32. I am filling out the forms and I have questions.

Please call the Arizona Department of Revenue (for Transaction Privilege Tax questions or filing taxes) at (602) 716-7368 or the Maricopa County Assessor’s Office (for classification as a rental) at (602) 506-3406. You may contact the Town and request to have forms, instructions, and links to more information emailed to you. The Town of Fountain Hills will be unable to provide tax advice.

33. My brother lives there and he pays the mortgage. I got the loan in my name but it is my brother’s home.

Please insure that your property is correctly registered with the Maricopa County Assessor’s Office as a class 3 property. If you have questions of a complex nature regarding your potential rental property, ask the Arizona Department of Revenue.

34. I have not filed the Maricopa County Assessor’s Office form yet because it asks for social security number and we do not have one. We are Canadian citizens. Should I leave it blank?

Yes, unless you have some other identifying number you use while in the US.

35. I have a condominium rented 3 months of the year. I would rather sell it than register it and deal with this.

The decision is yours. However, if you keep it and continue to rent, you will need to register the property and pay the taxes due.

36. I have two condominiums in Fountain Hills. I have not received a Transaction Privilege Tax (TPT) license and am going to miss the deadline. I am really worried.

We will mark you as “pending” in our database. Please advise the Town of the license number when you receive it.

37. I have a Transaction Privilege Tax (TPT) license, but do I need to get a new one because of the ownership change from my name to a trust?

Yes. Please contact the Maricopa County Assessor’s Office and the Arizona Department of Revenue for further information.

38. My home is not a rental. I only own one home and it is not a rental.

The Maricopa County Assessor’s Office shows the home as classified as a 4.2, a residential rental property. Please contact the Maricopa County Assessor’s Office to change the classification.

39. My daughter lives in my other home and does not pay rent.

If your daughter is not paying rent, no Transaction Privilege Tax license is needed until rent is collected. The Maricopa County Assessor’s Office class should be Class 3 with a qualifying family member. This class can be changed with the Maricopa County Assessor’s Office.

40. I rent my home through VRBO (or any other short-term rental company). Do I owe taxes?

Currently, VRBO (or other short-term rental company) only charges your renter and remits taxes on your behalf by agreement with you. Check with your short‐term rental company to see what your agreement is. The owner is responsible for ensuring that the proper taxes are paid. The owner also must have a Transaction Privilege Tax license and report at least annually. The Arizona Department of Revenue will tell you how often you should report. You may use the owner’s statement, provided by the short-term rental company, as proof of the payment of taxes when you file the return.

41. I cannot complete the Fountain Hills registration because I do not have a Transaction Privilege Tax (TPT) license number. Is that something that comes from Arizona Department of Revenue?

Yes. Do not complete the Fountain Hills online registration until you receive the Transaction Privilege Tax license from the Arizona Department of Revenue. You must obtain the Transaction Privilege Tax license from the Department of Revenue. It takes about 1‐2 weeks to receive the license.

42. I need some information to finish my rental property registration.

Please call the Arizona Department of Revenue at (602) 716-7368 or the Maricopa County Assessor’s Office at (602) 506-3406.

43. I just bought a new rental property. How do I add a location to my tax license?

Please contact the Arizona Department of Revenue at (602) 716-7368 or use this form https://azdor.gov/forms/tpt-forms/business-account-update.

44. I just sold a rental property but still have others, what do I do?

Please complete the “Business Account Update” form from the Arizona Department of Revenue. You can make changes to your license on the form. The form is available at https://azdor.gov/forms/tpt-forms/business-account-update.

45. I own a condominium in Fountain Hills and have been paying the rental taxes. Do I need to fill out registration with Maricopa County Assessor’s Office and notify the Town?

Yes. Both the Maricopa County Assessor’s Office and Town require the information so we can update our records.

46. I owned the property and rented it for 6 years. I paid the rental taxes but not under my name. Instead, I have been paying under my company name for the Transaction Privilege Tax (TPT) license.

Please register online with the Town at https://www.fh.az.gov/rentals and enter your Transaction Privilege Tax license number.

47. I have owned a rental property for a long time. I need help with the Transaction Privilege Tax (TPT) tax form. The form will not allow any date prior to 1994.

The Arizona Department of Revenue form will not take any date earlier that 1995. Just enter 1/1/1995 as the beginning rental date

48. I only rented the property for three months and made only $6,500 and do not plan to rent it again.

If audited, you will need to obtain a Transaction Privilege Tax license and pay the back taxes. We would recommend that you do so now so that no penalties are assessed upon the audit.

49. It is on the market for sale and it has stopped being for rent.

If audited, you will need to obtain a Transaction Privilege Tax license and pay the back taxes. We would recommend that you do so now so that no penalties are assessed upon the audit.

50. It was a rental in 2007, but is not now.

You should classify the property properly with the Maricopa County Assessor’s Office based on how it will be used in the future. You should also obtain a Transaction Privilege Tax license and pay the appropriate back taxes.

51. Please advise if we are required to complete the Maricopa County Assessor’s Office registration form in addition to having obtained a business license for our rental property.

The Town of Fountain Hills does not require a business license for a rental property, but the Arizona Department of Revenue requires that you have a Transaction Privilege Tax license. You do need to register the property with the Maricopa County Assessor’s Office.

52. I purchased the property in June 2018 and have not rented it out.

You should also register the property correctly with the Maricopa County Assessor’s Office as a primary residence, class 3.

53. I want to know how to get caught up with back taxes.

Please contact the Arizona Department of Revenue to find out how to report and pay back taxes.

54. I want to know if this was always a law.

The Town has had a residential rental tax since 2004. However, like you, many people were not aware of the law and the tax requirements.

55. We do not own rental property and do not know why you think we are a property manager. I do not have rental property in Fountain Hills. I moved away a year ago and do not own rental property.

You are named as a statutory agent for a neighbor/friend of yours. You need to remove your name as statutory agent with the Maricopa County Assessor’s Office.

56. What is a class 4? I am helping my dad with his property.

Class 4 is a mixed class, probably a duplex, where he lives in one side, and rents the other side. You need to obtain a Transaction Privilege Tax license and register with the Maricopa County Assessor’s Office.

57. What is the Assessor’s Parcel Number (APN)? How do I know how to get it?

Assessor’s Parcel Number (APN) is the number that was assigned when Fountain Hills began as a community many years ago. You can find the parcel number for your property on the Assessor’s website at https://mcassessor.maricopa.gov/.

58. What rentals do you think I have? I am puzzled.

The Town saw your property for rent on a website, such as Zillow. You need to become compliant and let the Town of Fountain Hills know you are paying taxes.

59. Who is a “Qualified Family Member”?

Per the Maricopa County Assessor’s Office, a ‘qualified family member’ includes only:

1. a natural or adopted child or descendant of the owner’s child;
2. a stepchild of the owner;
3. the owner’s parents or an ancestor of the owner’s parents;
4. a stepparent of the owner;
5. a child-in-law of the owner, or;
6. a natural or adopted sibling of the owner.

60. If I own more than one rental property, do I need a Transaction Privilege License (TPT) for each property?

No, only one Transaction Privilege Tax license is needed for each owner. However, each rental property will require a separate location under each Transaction Privilege License.

61. When is the tax payment due?

All payments are due by the 20th of the month following the end of the reporting period.

62. How can I change the classification of my property?

You will need to contact the Maricopa County Assessor’s Office. You may either call them at (602) 506-3406 or email at pubasst@mail.maricopa.gov.

63. My unit is currently vacant; do I still need to file a return?

Even if you had zero rental income, you are still required to file a return. On the return, you will indicate no activity for the reporting period by entering zero in the revenue column.

64. How do I change my property from a rental to a primary residence?

You will need to complete the Arizona Department of Revenue form 82179B – Taxpayer Notice of Claim – Real Property. Please contact the Department of Revenue at (602) 255-3381 if you have questions.

65. How do I change my property from a rental to a vacation home?

A letter needs to be sent to the Maricopa County Assessor’s Office explaining that you no longer have a rental property and want to change the classification of that property to a vacation home. A vacation home is not considered your primary residence.