In a significant development for Arizona's rental market, Governor Katie Hobbs recently signed SB 1131 into law, effectively prohibiting municipalities from imposing taxes on residential rentals.
This move comes as part of a broader legislative session that has seen both Republicans and Democrats achieve their desired outcomes.
Background of SB 1131
SB 1131, sponsored by Senator Petersen, aims to address the issue of taxation on residential rentals in Arizona. Before the passing of this bill, residential rental properties were subject to transaction privilege tax (TPT) under the Model City Tax Code.
Some cities opted to tax residential rental income, which added a burden on tenants. However, SB 1131 brings about a significant change by prohibiting municipalities and counties from levying taxes on residential rentals.
Key Provisions of SB 1131
The newly signed bill, SB 1131, includes several essential provisions that will shape the taxation landscape for residential rentals in Arizona.
Prohibition of Rental Taxes: The primary objective of SB 1131 is to prohibit counties, cities, and towns from levying taxes on rentals, offering relief to both landlords and tenants. This prohibition takes effect on January 1, 2025, allowing municipalities ample time to adjust their tax policies.
Tenant Relief: Landlords affected by the elimination of TPT in municipalities that previously imposed it on rentals are required to stop charging tenants the amount of repealed TPT by October 1, 2024. This provision aims to alleviate the financial burden on tenants and improve affordability.
Burden of Proof: In any civil action challenge, landlords have the burden of proving that a challenged charge or assessment is not attributable to any portion of a city's or town's TPT on a rental. This provision ensures transparency and fairness in resolving disputes related to rental charges.
Implications of SB 1131
With the prohibition of rental taxes, tenants can expect relief from the financial burden associated with additional taxes on residential rentals. The potential savings of up to $200 per month, as highlighted by the Arizona State Senate Republican Caucus, can be allocated to essential expenses such as medical bills, food, and transportation costs.
The elimination of rental taxes is likely to make the rental market more attractive for both tenants and landlords. The removal of these taxes may contribute to increased demand for rental properties, leading to a more vibrant and competitive market.
Contact GoldenWest Management
Are you tired of the endless hassle that comes with managing your rental properties? Look no further than GoldenWest Management!
Our professional property management services in Arizona, California, and Nevada are here to save the day.
With our experienced team on your side, you can finally say goodbye to late-night repair calls and tenant headaches. We handle everything from marketing and tenant screening to maintenance and rent collection.
Contact us today at (866) 545-5303 or click here to start a property management quote online.
Friday, December 1, 2023
As a realtor, the choice between hiring a property manager and managing your properties yourself is a crucial decision that can significantly impact your investment success.
Monday, November 27, 2023
Are you planning on relocating to San Diego? If so, you’re making a smart choice. San Diego is a vibrant city with year-round activities, great weather, and opportunity for personal or professional growth.
Thursday, November 2, 2023
In the state of California, both landlords and tenants have specific rights and responsibilities when it comes to property access and privacy. One area of confusion for many real estate agents, landlords, and property managers is the 120-day notice to tenants, which allows for property inspections and showings.