If you’ve ever groaned while renewing your Transaction Privilege Tax (TPT) license, maybe even joked about needing a second cup of coffee just to understand it, you’re not alone.
Well, landlords, here’s some big news: the new TPT ban is shaking things up in Arizona, especially in Mesa. Whether you manage one rental or a growing portfolio, understanding what this change means for you is crucial.
What Exactly Is the TPT Ban?
For years, landlords in Arizona were required to collect and remit the Transaction Privilege Tax, essentially a sales tax on rental income. The state considered rental activity a “business,” and that meant filing monthly or quarterly returns.
But as of January 2025, that’s changing. The TPT ban eliminates the requirement for residential rental owners to hold or renew a TPT license or pay this tax on long-term rentals. (Short-term rentals? That’s another story; those are still taxable.)
This move aims to simplify the tax system and ease the burden on everyday property owners. For Mesa landlords, it’s both a sigh of relief and a call to double-check your accounting.
The Upside: Less Red Tape, More Freedom
The clearest benefit? Less paperwork and more predictability. No more separate filings, state forms, or worrying about late penalties from the Arizona Department of Revenue.
Without TPT, landlords can streamline operations, reduce administrative costs, and keep more rental income. Smaller investors, the folks managing one or two properties, stand to gain the most, as compliance tasks often took up more time than they were worth.
And let’s be honest, no one misses filing taxes more often than absolutely necessary.
The Flip Side: New Responsibilities and Local Impacts
Of course, there’s a “but.” The TPT ban also means cities like Mesa will lose out on rental-related tax revenue, which could eventually affect local infrastructure or city services.
Landlords should also stay alert for city-level fees or inspection rules that might replace the TPT as municipalities look for new revenue sources. And while the TPT is going away, you’ll still need to report rental income on your state and federal taxes.
So, while it’s simpler, it’s not exactly hands-off.
What Should Mesa Landlords Do Now?
- Cancel your TPT license if you only own long-term rentals.
- Update your leases to remove language about collecting TPT from tenants.
- Consult your accountant or property manager to ensure proper transition.
- Keep an eye on local regulations; Mesa or Maricopa County may introduce new compliance rules.
FAQs About the TPT Ban
Q1: Does this apply to short-term rentals?
No. If you rent properties for less than 30 days at a time (Airbnb, VRBO, etc.), you’re still required to collect and remit TPT.
Q2: What if I own rentals in multiple Arizona cities?
The TPT ban applies statewide, but local business licensing may vary. Always confirm with each city’s requirements.
Q3: Do I still have to pay income tax on rental profits?
Yes, the ban affects only the TPT, not income taxes. You’ll still report rental income on your state and federal returns.
Q4: Can tenants ask for rent reductions since TPT is gone?
That’s up to you, but most landlords won’t be required to lower rent. Many will use the savings to cover maintenance or inflation-related costs.
Q5: When does the change take effect?
The ban begins January 1, 2025. Be sure to adjust your leases and financial systems before then.
Simplify, Save, and Succeed with the Right Partner
Change always brings a little chaos, but it doesn’t have to bring confusion. At LHM Realty, we help Mesa landlords navigate new laws, streamline operations, and stay compliant without losing sleep (or profit).
Whether you’re adjusting to the TPT ban or growing your portfolio, our property management experts are here to guide you from tax updates to tenant care.
Explore how we can simplify your rental experience today at LHMRealty.com and schedule a free consultation.
