ARIZONA HOUSE OF REPRESENTATIVES

Fifty-fifth Legislature

Second Regular Session

Senate: FIN DPA 8-2-0-0 | 3rd Read 27-2-1-0

House: WM DPA 6-4-0-0

SB 1116: tax credit; foster care organizations

NOW: municipal tax exemption; residential lease

Sponsor: Senator Livingston, LD 22

House Engrossed

Overview

Prohibits municipalities from levying municipal tax on the business of renting or leasing real property for residential purposes.

History

Residential rental is the rental of real property for a period of 30 or more consecutive days for residential purposes only. Residential rental properties are subject to transaction privilege tax and imposed when engaged in business under the residential rental classification by the Model City Tax Code. Some cities, not all, opt to tax residential rental income under Section 445 of the Model City Tax Code.

Provisions

1.   ☐ Prop 105 (45 votes) ☐ Prop 108 (40 votes) ☐ Emergency (40 votes) ☐ Fiscal NoteProhibits a city or town from levying a tax or fee on the business of renting or leasing property for residential purposes. (Sec. 1, 2, 4, 5)

2.   Establishes that this preemption does not apply to healthcare facilities, long-term care facilities, hotels, motels or other transient lodging businesses. (Sec. 4, 5)

3.   Applies regardless of whether the municipality has adopted the model city tax code. (Sec. 4, 5)

4.   Repeals 42-6011, which addresses municipal transaction privilege tax on residential rentals. (Sec. 6)

5.   Requires the owner of a residential rental property to reduce the amount of rent due by an amount equal to the difference caused by the elimination of the municipal TPT on renting or leasing real property for residential purposes. (Sec. 8)

6.   Directs DOR to notify affected property owners of the elimination of the municipal TPT and outlines procedures for sending notice. (Sec. 9)

7.   Repeals the rent reduction and DOR notification of property owners on January 1, 2026. (Sec. 8, 9)

8.   Contains a retroactivity clause of October 1, 2022 relating to the DOR notification of property owners. (Sec. 9)

9.   Contains a legislative intent clause. (Sec. 10)

10.  Contains an effective date of October 1, 2024. (Sec. 11)

11.  Makes technical and conforming changes. (Sec. 1, 2, 3, 7)

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15.                    SB 1116

16.  Initials ES/VP/NM Page 0 House Engrossed

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