Complete Guide To Get A Vacation Rental License in Phoenix Metro, AZ  [UPDATED 2024]

What is a Vacation Rental?

In accordance with Arizona state law, a vacation rental property, commonly known as Airbnb rental, refers to any individually or collectively owned single-family or one-to-four-family house or dwelling unit. 

This also includes units or groups of units in a condominium, cooperative, or timeshare, provided that they serve as transient public lodging establishments or owner-occupied residential homes offered for transient use. Notably, these accommodations are not classified for property taxation under section 42-12001.

Arizona State Regulations on Short-Term Rentals

Under current Arizona state law, House Bill 2672 establishes guidelines regarding short-term rentals, prohibiting cities or counties from imposing restrictions or regulations based on their classification, use, or occupancy. 

However, exceptions are made for the protection of public health and safety. Cities and counties are allowed to adopt and enforce residential use and zoning ordinances, which may include regulations on noise, property maintenance, and other nuisance issues.

Key Points:

1. Short-term rental operators are required to possess a current transaction privilege tax license and must prominently display this license number on each advertisement for every accommodation they manage, including online marketplace listings.
   
   
2. Failure to comply with this requirement carries consequences:

• A civil penalty of up to $250 for the initial offense.
• Subsequent offenses may incur penalties of up to $1,000.
• Verified violations may lead to a $500 civil penalty imposed by the department.
• Repeat violations on the same property within a 12-month period:some text
  • A second offense warrants a $1,000 penalty.
  • A third offense and any subsequent offenses within the same 12-month period may result in a civil penalty equivalent to 50% of the property's gross monthly income or $1,500, whichever is greater.

It's important to note that A.R.S. §9-500.39 does not restrict Homeowner Associations' authority to regulate or restrict the use of short-term rentals within their communities.

Licensing Requirements & Fees for Short-Term Rentals in Phoenix

Licensing Requirements & Fees for Short-Term Rentals in Phoenix

To operate a short-term rental property in the City of Phoenix, owners are required to register their property using a designated form or platform provided by the city. The registration process entails providing specific details about the vacation rental, including:

1. Name of the property owner. If the owner is a business entity, the name of the statutory agent must be provided.
2. Address of the vacation rental.
3. Phone number and email address of the property owner or their designated agent, responsible for addressing complaints promptly, either in person, over the phone, or via email, at any time of the day.

In case of any changes to the provided information, the owner must update their registration within 10 days.

Upon successful registration, the City of Phoenix will issue a unique vacation rental registration number for each registered property.

Taxation Regulations:

1. Hotel Tax: Owners and operators of hotels and certain property rentals in Phoenix are required to obtain a license. A 3% tax is levied on the gross income generated from lodging charges for transient guests. Property owners should refer to Chapter 14 of the City Code to determine if their listing is subject to hotel and rental tax.
2. Sales Tax: Phoenix imposes a sales tax on real property rentals, including a transient lodging tax of 2.3%. However, this tax is not applicable to guests who are not "permanent residents" or guests staying longer than 30 days. Typically, hosting platforms collect this tax from guests and remit it to the city of Phoenix.

For further information and resources, individuals can refer to the Phoenix Municipal Codes available here.

Inspection Requirements for Short-Term Rentals in Phoenix

Listing Statement

Short-term rental properties, whether advertised online or offline, are required to include the following statement in their offers or advertisements:

"This property cannot be used for purposes identified in the City of Phoenix Ordinance Section 10-195(c). The City of Phoenix short-term registration number for this property is [registration number]."

Notice Inside the Rental Proerty:

Additionally, short-term rental properties must prominently display the following notice inside the rental property:

NOTICE: The following uses are prohibited on this property:

• Any nonresidential use.
• Holding special events requiring permits or licenses under city, town, or state regulations.
• Operating retail businesses, restaurants, event centers, banquet halls, or similar establishments.
• Housing sex offenders.
• Operating or maintaining sober living homes.
• Selling liquor, illegal drugs, or pornography.
• Operating nude or topless dancing establishments.
• Engaging in obscenity or adult-oriented businesses.
• Other uses prohibited by A.R.S. 9-500.39.

Building Standards

Short-term rental properties must comply with Phoenix building codes regarding construction, design, and maintenance, ensuring adherence to regulations on habitability, health, and safety. Detailed city building codes can be accessed online.

Responsible Agent Requirement

Arizona state law mandates that short-term rental owners provide the city or town with contact information for their "responsible agent." This agent is tasked with promptly addressing complaints in person, over the phone, or via email, at any time of the day.

Notification of Violations

Counties are required to inform the Department of Revenue and property owners about verified violations, adhering to relevant laws, regulations, and ordinances specific to each county.

Display of Contact Information

Owners must prominently display the phone number and email address of the property owner or their designated agent, responsible for addressing complaints, within 10 feet of the primary entrance inside the rental property. This information should be easily visible to guests at all times.

Considerations for Managing Short-Term Rentals (STRs) in Phoenix, AZ

Usage Restrictions:

Short-term rentals are not permitted for non-residential purposes such as hosting special events, operating retail establishments, restaurants, banquet spaces, or similar commercial uses.

Response Time to Police Requests:

Owners or their designated agents, listed on the vacation rental registration, must be present at the rental premises or available by phone or text within 60 minutes upon request by a police officer. Failure to comply constitutes a violation.

Homeowners' Association (HOA) Regulations:

While Arizona state legislation prohibits the regulation or restriction of short-term rentals by cities and counties, HOAs retain the authority to establish their own rules and regulations governing short-term rentals within their communities.

Data Analysis Methodology

Our analysis for this guide involved gathering data from various public sources, including county assessor records, recently sold homes, Bureau of Labor and Statistics data, and Airbnb data. We utilized machine learning models to derive forecast models for the most accurate predictions.

Glossary:

• ADR (Average Daily Rate): The average rental income generated per day.
• Gross Yield: Calculated by dividing the median revenue by the median home price, providing insight into the investment's profitability.

If you're considering having a vacation rental business in Maricopa County, feel free to schedule a complimentary consultation with one of our experts.