If you Own a Rental Property you may be Subject to Transaction Privilege Tax

I attended a meeting yesterday with fellow NARPM (National Association of Residential Property Managers) members and the AZ Department of Revenue where they discussed the upcoming TPT (Transaction Privilege Tax) filing and licensing changes. First, this is a boring subject for most so I will keep it short and sweet with bullet points on what I think is most important to know for my clients and prospective clients that may be reading this.

Currently our rental property owners are added to our Master TPT license and we are able to file everyone under one filing, in bulk. But starting with the January 2018 filing, which is due in February, each owner of residential property needs to have his/her separate individual license.

Here are things you should know:

  • Transaction Privilege Tax is a tax on the privilege of doing business in Arizona.
  • Starting with the January 2018 reporting period, PMCs (Property Management Company) will no longer be permitted to report and remit TPT using their own TPT license (formerly referred to as a “Master License”) on behalf of client property owners. All taxes are to be filed and remitted using the property owners’ license numbers. (For my clients, I have a POA on our management agreement which will allow me to apply and obtain your new license and allow my company to file each period, for each property I am managing).
  • If you do not have a Property Manager handling this for you I would visit AZDOR.GOV to learn more and to apply and engage in the new program.
  • If you own multiple properties held under the same entity you can obtain one license with multiple locations.

I can only assume these changes although much tougher on the Property Management Companies will help the AZ Department of Revenue find and collect on the rental properties not currently paying taxes.

There will very likely be updates and possibly changes as ADOR. Myself, AZ Property Management Group will be in contact as we execute these changes.