How to Handle Taxes for Phoenix-area Landlords Who Rent Out for Big Events

By Judy J. Beasley Last updated Feb 2, 2023

PARADISE VALLEY, Ariz. (3TV/CBS 5) — A recent post on social media caught the attention of many people. “So you live in Arizona?” Want to make big bucks during the Super Bowl but don’t have a rental property? Got you,” Kara Beckmann promised in her Instagram video. The interior designer and real estate expert explained that the so-called Augusta rule allows landlords to rent out their homes, up to 14 days a year, without having to report this income on their individual tax return.

“[The post] had a lot of engagement, and I’m surprised how many people had never heard of this rule before, because it’s been a rule for years and years,” Beckmann said in an interview with On. Your Side at an Airbnb property she renovated in Paradise. Valley.

Augusta Rule got its name from some homeowners in Augusta, Georgia who wanted to rent out their home during the Masters Tournament. “They basically wanted to rent out their property but not consider it a business,” Beckmann said. “And so Augusta’s rule was born and now we can use it in all 50 states and it allows owners to do just that: capitalize on these big events.”

Kody Thompson lives in Tampa Bay, and as soon as Tom Brady’s Buccaneers punched their ticket to the Super Bowl in 2021, he and his roommate decided to rent their apartment. “I said, ‘Hey! We need to post this now. So, literally, I took pictures, posted them, put them up, and it cost almost $3,000 for Super Bowl weekend,” Thompson said. “I was posting, ‘Thank you, Tom Brady for paying my rent!'”

In Arizona, there is a catch. According to Rebecca Wilder, spokeswoman for the Arizona Department of Revenue, there are taxes on short-term rentals, regardless of the length of the rental. “Short-term residential rental income is subject to transaction privilege tax. This is often referred to as a sales tax, so if you plan to rent out your home, you must apply for a TPT license. seasonal,” Wilder said.

You can apply for a seasonal TPT license online at AZtaxes.gov. If you’re renting out your home for the Super Bowl, your temporary TPT must be active for the month of February, according to ADOR, and once you’re done renting out your place, it’s important to cancel the TPT. You should also check with your city or town. Many now require registration and some also have municipal taxes. “Each city has its own requirements for residential rental properties,” Wilder said. “And you may need to apply for a business license through the city.”

If you have decided to rent your accommodation, you must prepare it. “I think the advice would be to really clear the clutter,” Beckmann said. “I would definitely make sure you have a coffee maker, toaster, some of those daily necessities available to the guest. But you don’t have to make it look Airbnb-worthy for it to attract guests. Location is really important. And it doesn’t get any better than the Valley in February.