Short-Term Rentals are residential properties rented for LESS THAN 30 DAYS such as:

• also vacation rentals
• single-family homes
• guest house
• apartments
• condominiums
• rooms for rent
• corporate housing

Short-Term Rentals are:

• subject to Transaction Privilege Tax(TPT or sales tax)
• an alternative to hotels and motels (but taxed the same)
• commonly advertised on an online lodging marketplace (OLM)
• required by law to be licensed with the City of Tempe if property located in Tempe
• required by law to register with the Maricopa County Assessor's Office (Tempe penalty is $1,000)

Short-Term Rental Requirements Effective March 6, 2023

Owners of short-term rental properties in Tempe will need to:

• Obtain a Tempe Short-Term Rental License license and pay an annual $250 license fee for each property or unit. (License fee is $187.50 if issued after July 1)
• Provide proof of a valid sales tax license and evidence the rental is registered with the Maricopa County Assessor’s Office.
• Require the display of the local license number on advertisements.
• Notify all residential properties adjacent to, directly, and diagonally across the property of their emergency contact information. Responses to complaints would be required from the emergency point of contact within 30 minutes for complaints for which public safety personnel are dispatched or 24 hours for non-emergency complaints. 
  • If the short-term rental is a multiple-residence unit, notice shall be provided to the owners or residents of all residential units located on the same floor of the same building as the short-term rental. 
• Maintain liability insurance of at least $500,000 or provide evidence that each vacation rental or short-term rental transaction will be provided through an online lodging marketplace that provides equal or greater primary liability insurance coverage for the short-term rental.
• Conduct a sex offender background check on the person booking the short-term rental at no cost by using the online national sex offender public website operated by the United States Department of Justice (https://www.nsopw.gov/) and retain a record either in hard copy or electronic form of the background check for 12 months after the booking date.

The Tempe City Council approved a Short-Term Rental License, with an effective date of March 6, 2023; to protect the health, safety, and welfare of the City’s residents and visitors by enacting reasonable regulations of short-term rentals consistent with A.R.S. §. 9500.39; to help mitigate harmful abuses associated with short-term rentals, while preserving property owners’ rights to rent their property in a manner that does not disturb the peace, or harm public health, safety, or welfare.

Per Tempe Ordinance No. O2023.01, short-term and vacation rental property owners must obtain and maintain a City of Tempe Short-Term Rental License for each Tempe property.  The non-refundable annual license fee is $250 per property; funds received will go 100 percent to cover costs associated with licensing short-term rental properties. (License fee is $187.50 if issued after July 1)

NOTE: The City of Tempe Short-Term Rental License described here applies to transient lodging, rentals of less than 30 days, as defined by A.R.S. § 42-5070.  Owners that rent for 30 days or longer do not need to obtain a City of Tempe Short-Term Rental License.

Provisions of the ordinance include:

• Prior to offering a property as a short-term rental, the owner shall obtain an annual short-term rental license from the City. The license application shall contain the following minimum information, which shall be made publicly available: The owner of a short-term/vacation rental shall provide the City of Tempe with the name, address, and telephone number of the owner for which the short-term license is to be issued.  If the property owner is an entity, the legal name of the entity and its statutory agent.

• The name, address, and telephone number of each designee of the owner, if any.
• The full name, address, and twenty-four (24) hour telephone  number of the individual who will serve as the emergency point of contact.

• Owners of short-term rental properties are required by law to obtain a TPT license from the Arizona Department of Revenue (ADOR), whether the owner rents the property themselves or employs a property management company.  ADOR administers and collects the tax on behalf of all Arizona cities and towns. You may register, file, and pay online at www.AZTaxes.gov. 
• Add region codes applicable to Tempe (TE) and MAR for County.  NAICS Code 721199
• Add business codes: County 025-Transient Lodging; City 044-Hotel; and 144-Additional Hotel tax.

• All owners of short-term/vacation rentals are required by law to pay the transaction privilege tax (TPT) of 1.8% and the transient lodging tax of 5.0%. (Plus, Maricopa County 7.27%; Total Tax Rate combined = 14.07%)
• Property owners who book through an Online Lodging Marketplace (OLM) with applicable taxes paid by the OLM, must still file a tax return showing the gross receipts received from the OLM with a deduction equal to the amount received by the OLM (deduction code 775).
• Form 5018 Online Lodging Operator Exemption Certificate – This Certificate establishes liability for the registered OLM for the applicable tax as defined in A.R.S. 42-5076 and 42-6009(B).
• The City license number must be posted on all advertisements.

• All rental properties, including short-term rentals, shall register certain information related to the property with the Maricopa County Assessor. (A.R.S. 33-1902)  (mcassessor.maricopa.gov)
• Tempe Short-Term Rental owners are required to provide notification to each single-family residential property adjacent to, directly across, and diagonally across from the property, or in a multi-family residential building, all units on the same building floor.  (Note: adjacent shall mean the condition of being near to or close to but not necessarily having a common dividing line. Therefore, two (2) properties which are separated only by a street or alley shall be considered adjacent to one another.)  
• No later than twenty-four (24) hours before every stay; conduct a sex offender background check on the person booking the short-term rental, through the online national sex offender public website operated by the United States Department of Justice (https://www.nsopw.gov/). The owner shall retain a record (either hard-copy or electronic) for twelve (12) months after the booking date.

The requirements above are satisfied and/or waived if the OLM platform on which the short-term rental is advertised performs the background check.

• Evidence of liability insurance in the aggregate of at least $500,000 or evidence that each short-term rental transaction will be provided through a platform that provides equal or greater primary liability insurance coverage.
• Acknowledgment by the owner to comply with all applicable laws, regulations, and ordinances, including the requirement that the owner and each designee shall not be a registered sex offender, been convicted of any felony act that resulted in death or serious personal injury, or been convicted of a felony use of a deadly weapon within the past five years.
• Civil Penalties:  Fines may be assessed for violating any local ordinance or state law
• License Suspension: A short-term license may be suspended for up to 12 months if there are three (3) verified violations within a rolling 12-month period, or a single serious infraction.
• Compliance with city ordinances and regulations is important to protect the property owners engaged in short-term rentals, their neighbors, and the safety and quality of Tempe’s neighborhoods.
• Property owners are responsible for ensuring that renters are complying with all applicable rules and regulations; such as, noise, nuisances, parking, maximum property allowances, trash/recycling, etc.
• If you will be improving the property, some improvements may require a building permit before beginning the work. 

APPLICATION REVIEW & TIMEFRAMES

The City shall issue or deny the license with seven (7) business days after receipt of a complete application, except that the City may deny issuance of a license for any of the following reasons:

1.  The applicant failed to provide the information required;

2.  The applicant failed to pay the license fee required;

3.  The applicant provided false information;

4. The owner or designee of the owner: (i) is a registered sex offender; (ii) has been convicted of any felony act that resulted in death or serious physical injury; or (iii) has been convicted of any felony use of a deadly weapon within five (5) years of submitting the application; or

5.  At the time of application, the owner has a suspended license for the same short-term rental or  any of the following applies: (a) one violation at the short-term rental that resulted in or constituted any of the offenses described in Sec. 16A-221; or (b) three violations of this Article at the vacation rental within a twelve (12) month period, not including an aesthetic, solid waste disposal or vehicle parking violation that is not also a serious threat to public health and safety.

A.R.S. § 9-834. Prohibited acts by municipalities and employees; enforcement; notice

A. A municipality shall not base a licensing decision in whole or in part on a licensing requirement or condition that is not specifically authorized by statute, rule, ordinance or code. A general grant of authority does not constitute a basis for imposing a licensing requirement or condition unless the authority specifically authorizes the requirement or condition.

B. Unless specifically authorized, a municipality shall avoid duplication of other laws that do not enhance regulatory clarity and shall avoid dual permitting to the maximum extent practicable.

C. This section does not prohibit municipal flexibility to issue licenses or adopt ordinances or codes.

D. A municipality shall not request or initiate discussions with a person about waiving that person’s rights.

E. This section may be enforced in a private civil action and relief may be awarded against a municipality. The court may award reasonable attorney fees, damages and all fees associated with the license application to a party that prevails in an action against a municipality for a violation of this section.

F. A municipal employee may not intentionally or knowingly violate this section. A violation of this section is cause for disciplinary action or dismissal pursuant to the municipality’s adopted personnel policy.

G. This section does not abrogate the immunity provided by Section 12-820-01 or 12-820.02.

A.R.S. 9-495, as amended by SB1382. Employees providing assistance; identification; communication; notice

A. In any written communication between a city or town and a person to provide the name, telephone number, and email address of the employee who is authorized and able to provide information about the communication if the communication does any of the following:

1. Demands payment of a tax, fee, penalty, fine or assessment;

2. Denies an application for a permit or license that is issued by the city or town; or

3. Requests corrections, revisions or additional information or materials needed for approval of any application for a permit, license or other authorization that is issued by the city or town.

B. An employee who is authorized and able to provide information about any communication that is described above shall reply within five (5) business days after the city or town receives that communication.

CLICK HERE FOR SAMPLE NEIGHBOR NOTIFICATION TO USE 

Tempe Short-Term Rental owners are required to provide notification (after you have an approved Tempe Short-Term Rental License) to each residential property adjacent to, directly across from, and diagonally across the street of the short-term rental property in writing.

If the short-term rental is a multiple-residence unit, notice shall be provided to the owners or residents of all residential units located on the same floor of the same building as the short-term rental in writing.

The neighbor notification shall include:

• The license number issued by the City
• The physical address of the vacation rental
• The name, physical address, email address, and twenty-four (24) hour telephone number of the emergency point of contact.

Penalties

• Failure to obtain a Tempe Short-Term Rental License for each Short-Term Rental located in Tempe carries a penalty of up to $1,000 per month
• Failure to provide emergency contact information for each Short-Term Rental located in Tempe carries an additional penalty of up to $1,000 per month.
• License suspension for up to 12 months for verified violations of the short-term rental ordinance.
• For verified violations of the short-term rental ordinance within the same 12 month period:
  • Up to $500 or up to an amount equal to one night’s rent for the short-term rental as advertised, whichever is greater, for the first violation.
  • Up to $1,000 or up to an amount equal to two nights’ rent for the short-term rental as advertised, whichever is greater, for the second violation.
  • Up to $3,500 or up to an amount equal to three nights’ rent for the short-term rental as advertised, whichever is greater, for a third and any subsequent violation.

Compliance & Enforcement

Tempe Tax & License uses a technology to identify properties advertised on online lodging marketplace websites and has the authority to issue monthly penalties.

This technology identifies property owners, parcels, booking dates and booking revenues of short-term rental properties in Tempe.  Tempe Tax & License audit and collections staff are actively monitoring these properties and may contact owners to bring them into compliance.  New licenses may include penalty fees.

File A Complaint for a Short-Term Rental - click here

To file a complaint about a Short-Term Rental or Vacation Rental, you do NOT need to Register for an Account(or create a login).  Please select link below Complaints once inside Accela Citizen Access(ACA) portal.

Arizona law allows for homes to be used as short-term vacation rentals (A.R.S. §9-500.39). Please use the link above to file a complaint about a Tempe Short-Term Rental.  Tempe Tax & License will provide details to Tempe Code Enforcement or Tempe Police.  The City will not provide updates to the  complainant.

To report Nuisance Parties call the Tempe Police non-emergency number 480-350-8311.  Officers will be dispatched to investigate and if warranted, issue Nuisance Party notifications.

A few tips that have helped in the past include:

• License your Short-Term Rental each year with the City of Tempe and provide the proper emergency contact for your property here. (Licenses expire on December 31 each year).
• Be respectful of your neighbors by letting them know about your short-term rental.  
• Be mindful of the noise your guests may be emitting and require them to end their social activities at a reasonable time.   
• Make sure your guests are parked legally & courteously.
• Place and remove trash barrels at the proper times
• Be sure there is no trash left on the property or on the streets
• Maintain landscaping of the property

A reminder - Tempe City Code TCC5-32 defines a Nuisance Party as an assembly of persons for a social activity or special occasion which constitutes a substantial disturbance (noise) of the quiet enjoyment of private or public property.  This also includes excessive traffic, obstruction of public streets by crowds or vehicles, public drunkenness, service of alcohol to minors, fights, disturbance of the peace, and litter.  Fines- 1st offense $250, 2nd offense $1,000, and 3rd offense $1,500.

Appeals

If you disagree with the City of Tempe's decision on your license denial or penalty, you have 10 days from the date of the determination to file an appeal. This means that in accordance with Tempe City Code Sec. 16A-222, this form must be received by the City of Tempe no later than ten (10) business days from the Effective Date of the penalty invoice. 

Use this form below when filing your appeal:

Tempe Short-Term Rental Appeal Form

Please send the completed form to our office by email at: license@tempe.gov. 

Short-Term Rentals & Vacation Rentals Are Required to Collect Transaction Privilege Tax Same As Hotels/Motels  

The gross income from the business activity upon every person engaging or continuing in the business of operating a hotel charging for lodging and/or lodging space furnished to any person for LESS THAN 30 DAYS.  This includes Short-Term Rentals and Vacation Rentals.

Short-Term Residential Rental is the rental of real property for a period of less than 30 days for residential purposes only and not commercial purposes.

Operating a Short-Term Rental or Vacation Rental?     

Licensing of your Short-Term Rental or Vacation Rental is required in the City of Tempe per Arizona Revised Statutes §9-500.39 and City of Tempe Ordinance No. 02023.01. Click the bell to license your property:

What activities are taxable within the Hotel, Motel, Short-Term Rental or Vacation Rental?

Arizona Tax Matrix for Hotel/Motel Lodging Industry

All Short-Term Rental and Vacation Rental properties are required to have a Transaction Privilege Tax license even if all Transaction Privilege Taxes (TPT) are reported by the online marketplace for lodging.

Short-Term Rental and Vacation Rental owners in Tempe can find more details on claiming deductions if all of their gross revenue is paid for by the online marketplace for lodging.  

Business code 025 (transient lodging) is used to report lodging bookings for less than 30 days for the state/county.

Business code 044 (hotel/motel) is used to report hotel/motel type of transactions for the cities. Business code 144 for additional hotel for those cities that have the additional hotel tax.

For short-term/vacation rentals, no special business codes are used to report the revenue received through an OLM or PMC.

If 100% of all listings are facilitated through the OLM, the property owner may deduct 100% of the income using the appropriate deduction code 775

How do I file and pay my Transaction Privilege Taxes?

You can register, file and pay online at www.AZTaxes.gov. It is fast and secure.

Other important details about filing and paying:

A landlord may offer a rental property on an Online Lodging Marketplace (OLM) or another type of digital platform. The OLM is required to be registered with ADOR to file and pay the tax on the transactions made through their online platform. Some landlords may employ a property management company (PMC) to manage the rental of the real property. If this occurs, the PMC may file and pay any applicable tax on behalf of the landlord. However, please note, the landlord is ultimately liable for filing and paying the taxes owed.

Revenues received from an OLM must still be reported to ADOR, but if 100% of all listings are facilitated through the OLM, the property owner may deduct 100% of the income using the appropriate deduction code 775. Any direct bookings received by the owner or property tax manager is not deducted and the owner/property manager is responsible for the tax.

Form 5018 - The operator/owner that receives short-term lodging revenue through an OLM will obtain a certificate, Form 5018, from the OLM stating they are collecting and remitting the tax as outlined in the Arizona Revised Statutes. This form is to be completed and signed by the OLM or his designee and should be retained by the OLM and the operator/owner to provide evidence of the exempt transaction.

Please note that Tempe Tax & License audit and collections staff uses a technology to identify property owners and parcels of short-term rental properties in Tempe.  

"Our mission is to provide quality service to all Tempe taxpayers, and administer the tax code in a fair and equitable manner."