ARIZONA HOUSE OF REPRESENTATIVES Fifty-sixth Legislature First Regular Session
	Senate: COM DP 4-3-0-0 | 3^rd Read 16-14-0-0 House: 3^rd Read 32-28-0-0

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SB1184: municipal tax exemption; residential leases (Substituted for HB2067)

Sponsor: Senator Kaiser, LD 15

Transmitted to the Governor

Overview

Prohibits municipalities from levying municipal tax on the business of renting or leasing real property for residential purposes effective January 1, 2024.

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. Prohibits a city or town from levying a tax on the business of renting or leasing property for residential purposes. (Sec. 1)

2. Prohibits a county from levying a tax on the business of renting or leasing property for residential purposes. (Sec. 2)

3. Requires that a landlord affected by the elimination of TPT in a city or town that levies TPT on the business of residential rentals to reduce the rent amount by an amount equal to the difference caused by the elimination of the tax by January 1, 2024 and repeals this requirement effective January 1, 2026.  (Sec. 4, 5)

4. Stipulates that revenues collected from remote sellers must be accounted for separately when depositing TPT revenues into the GF. (Sec. 6)

5. Requires municipalities to use monies from remote seller revenues for public safety before any other municipal purpose. (Sec. 6)

6. Prohibits, as of January 1, 2024 a city, town or other taxing jurisdiction from levying a transaction privilege, sales, gross receipts, use, franchise or other similar tax on the business of renting or leasing residential property for residential purposes and repeals the statute that allows that taxation to occur. (Sec. 7, 8)

7. Excludes health care facilities, long term care facilities, hotels or other transient lodging businesses. (Sec. 7)

8. States that the tax prohibitions apply regardless of whether the city or town has adopted the Model City Tax Code. (Sec. 7)

9. Strikes the ability for cities or towns to fine or penalize a lessor for not paying TPT on residential rent. (Sec. 9)

10. Directs the county treasurer to distribute $14,965,600 each month from the portion of TPT revenues to cities and towns that levied a residential rental TPT based on the city's or town's average monthly TPT collections. (Sec. 11)

11. Contains a statement of legislative intent. (Sec. 12)

12. Makes technical and conforming changes. (Sec. 1, 2, 3, 6, 7, 9)

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16.                   HB 2067

17. Initials VP  Page 0 Transmitted

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