Arizona Short Term Rental Laws

The State of Arizona has traditionally been a good place to invest in vacation rentals due to the popular tourist destinations, the unique natural landscapes, and the year-round demand from visitors. 

What makes the state an even better market to buy an Airbnb property are the relaxed Arizona short term rental laws. While most cities demand an annual STR license or permit, they don’t limit property types, number of licenses held, number of nights rented, or owner-occupied vs non-owner occupied rentals.

For an assessment of a specific address in Arizona, it’s best to submit your property to one of the top Airbnb property management companielis that operate in the state.

Arizona’s Definition of a Short Term Rental

The State of Arizona defines short term rentals - equivalent to vacation rentals - as any individually or collectively owned single-family home, one-to-four-family house, dwelling unit, or unit or group of units in a condominium or a cooperative that is a transient public lodging establishment as well as any owner-occupied residential home that is offered for transient use if the accommodations are not classified for property taxation under Section 42-12001 of the Arizona Statutes. This definition is provided in the Arizona Statutes Article 9-500.39.

The Arizona definition of a short term rental excludes units used for any non-residential use including retail, restaurant, banquet space, event center, and other similar uses.

Starting a Short Term Rental Business in Arizona

Launching an Airbnb business in any Arizona city generally requires similar steps, with some exceptions. 

To start a short term rental business in Arizona, owners need to provide:

• Arizona transaction privilege tax (TPT) license: All Arizona vacation rental owners need to pay TPT. To do this, they need to obtain a TPT license from the Arizona Department of Revenue (DOR) before applying for local regulatory licenses or permits.
• License or permit: Most Arizona cities demand the same type of vacation rental license or permit that needs to be renewed each year. There are no statewide licenses or permits for Airbnb properties in specific.
• Business registration: Some cities require vacation rental businesses to be registered at the local level.
• Zoning regulations: Zoning district regulations and limitations are rare in the State of Arizona when it comes to short term rentals, but it’s worth checking if there might be any in your particular market.
• Health and safety regulations: Local authorities impose strict rules that aim to protect guests and prevent the disturbance of local residents.
• Fee payment: Getting a state TPT license as well as obtaining a local regulatory permit requires an annual fee of a few hundred dollars, in most cases.
• Liability insurance: Airbnb hosts are required to have a general liability insurance of at least $500,000 unless it is provided by the vacation rental listing platform.
• Required paperwork: Arizona short term rental property owners need to prepare certain documents to apply for required licenses and permits. These are usually related to the contact information of the owner, owner’s designees, and emergency point of contact as well as the property address and some statements to confirm compliance with applicable regulations.
• Best practices for starting a short term rental business in Arizona: Before listing a property for renting, owners need to check out local legislation and regulations to ensure compliance with all applicable rules. They can consult with a local legal expert if anything sounds confusing. It’s also a good idea to work with an Airbnb manager who can take care of all legal requirements on behalf of the owner in addition to managing the property once it’s been licensed.

While Arizona short term rental regulations are easy to understand and abide by, Airbnb hosts need to be familiar with them and follow them strictly to avoid hefty fines reaching up to $3,500.

Short Term Rental Licensing Requirements in Arizona

The State of Arizona does not apply state-level licenses or permits to vacation rentals. While Article 9 of the Arizona Statutes prevents Arizona cities and towns from prohibiting short term rentals, it allows them to require owners to obtain and maintain a local regulatory permit. As a result, most Arizona cities demand a vacation rental license or permit from STR owners.

In most cases, the requirements are very similar in different locations as owners need to provide basic information about the property, themselves, any owner’s designees, and an emergency point of contact. Approvals or denials are typically given within 7 days of applying. 

Licenses and permits are usually valid for 1 year and need to be renewed before expiring, after paying an annual fee of a couple hundred dollars. A separate license is needed for each property. Arizona cities do not limit the total number of permits held by a single person at any point.

At the state level, all Airbnb hosts need to obtain an Arizona transaction privilege tax license to pay state and local TPT. Applications can be submitted in 4 different ways including online via the Arizona Department of Revenue website. With an online application, the license number is received on the same day. Arizona TPT licenses need to be renewed annually.

License Renewals for Short Term Rentals in Arizona

In most Arizona locations, Airbnb property owners need to renew 2 licenses on an annual basis. First of all, they have to renew their Arizona transaction privilege tax license issued by the Arizona DOR once a year. Second, Arizona cities that require a vacation rental license or permit ask for an annual renewal. Both of these renewals do not take more than a couple of weeks.

Required Documents for Arizona Short Term Rentals

Arizona vacation rental owners must submit the following to get necessary licenses and permits:

• TPT license issued by the Arizona DOR
• Business registration
• Local regulatory license or permit
• Federal EIN
• Social Security Number (SSN) or Individual Taxpayer Identification Number (ITIN)
• County or city short term rental license or permit
• Personal ID
• Certain statements based on templates
• Notification to neighboring properties about operating an Airbnb business
• Proof of payment of fees

There might be slight variations in the documentation required by each Arizona city, so owners need to check local regulations. In most cases, preparing necessary documents takes very little time.

Arizona Short Term Rental Tax

Based on Arizona short term rental laws, vacation rental owners need to pay a number of fees.

• Transaction privilege tax (TPT): All Airbnb owners need to pay state and local TPT, equivalent to sales tax. The state rate is 5.6%, while county and city levels vary. The combined rate might exceed 15% in some locations.
• Transient occupancy tax (TOT): Some Arizona cities collect a transient occupancy tax (TOT) or a transient lodging tax. Rates vary by location.
• Rental income tax: Federal and local income tax needs to be paid on Airbnb revenue.
• Property tax: Owners need to pay state and municipal property taxes.

STR investors can deduct various business-related expenses from their taxable income.

• Real estate depreciation (it’s recommended to conduct a short term rental cost segregation study to maximize benefits)
• Mortgage interest
• Mortgage insurance premium
• Property tax
• Airbnb insurance
• Furniture, appliances, and electronics
• Maintenance works
• Property management fees
• Marketing and advertising costs
• Cleaning fees
• Accounting, legal, and other professional service fees
• Home office expenses
• Business travel costs

Vacation rental property owners should take advantage of all deductibles in order to boost their cash flow and profit.

Statewide Short Term Rental Rules in Arizona

The State of Arizona does not impose any short term rental regulations. The only statewide requirement for Airbnbs is to pay TPT. It allows cities and towns to introduce local laws that protect public health and safety and require licenses. Most cities that have introduced legislation have very similar rules.

Generally speaking, Arizona vacation rentals have to provide safety equipment (like smoke alarms, carbon monoxide detectors, and fire extinguishers), not be used for non-residential purposes, notify neighbors of short term rental activities, be licensed or permitted, pay taxes, and not be rented to sex offenders.

Short Term Rental Laws by Arizona City

Most cities in the State of Arizona have enacted their short term rental regulations in order to protect local communities from potential adverse effects. These laws are in line with Arizona’s rules that prevent local authorities from prohibiting Airbnb rentals but allow them to regulate vacation rental businesses.

Following are the vacation rental regulations in the most popular Airbnb cities in Arizona:

1. Phoenix, Arizona Short Term Rental Laws

The City of Phoenix regulates short term rentals in the local market with Ordinance G-7156, effective as of November 2023. Phoenix uses the Arizona definition of short term rentals in its regulations.

Phoenix Airbnb properties need to obtain a short term rental permit from the Planning and Development Department of the City. Submitting a permit application requires the following information:

• Property’s physical address
• Owner’s name, address, phone number, and email
• Owner’s designee’s name, address, phone number, and email
• Emergency point of contant’s name, address, 24/7 phone number, and email
• Proof of valid transaction privilege tax license
• Evidence of liability insurance of at least $500,000 or evidence that the listing platform provides equal or greater liability insurance coverage
• Evidence that the short term rental is registered with the Maricopa County Assessor’s Office
• Signed agreement to comply with all relevant laws, regulations, and ordinances
• Proof of lawful presence in the US for individual owners
• Written description or map showing the locations of the smoke detector, carbon monoxide detector, fire extinguisher, and other safety equipment
• Other relevant documents
• $250 application fee

A separate application needs to be filed for each individual property. Applications are approved or denied within 7 days. Permits need to be renewed on an annual basis, at least 15 days before expiry, and the renewal fee is $250.

Phoenix short term rental owners need to comply with the following requirements:

• Send by certified mail a notice of intent to operate a short term rental to all neighboring properties and neighborhood associations and HOAs within 600 feet
• Display the local regulatory permit number on each ad of the property
• Display a copy of the permit within 10 feet of the primary entrance inside the vacation rental
• Maintain a working smoke and carbon monoxide detection and notification system
• Have a portable fire extinguisher in the kitchen and any area with an open fire source
• Display the owner’s, owner’s designees, and emergency point of contact’s name, phone number, and email within 10 feet of the primary entrance in a visible manner
• Not use the short term rental for non-residential use

Violating any of the Phoenix vacation rental regulations including operating an Airbnb business without a permit results in penalties ranging between $500 and $3,500. Permits might also get revoked for a period of 12 months.

The combined TPT rate in Phoenix is 8.6%.

In sum, while the City requires a permit, Phoenix has very host-friendly Airbnb laws that do not limit non-owner occupied short term rentals in any way. That makes the city an ideal location for out-of-state investors.

2. Tucson, Arizona Short Term Rental Laws

The City of Tucson has not implemented its own short term rental regulations. The only requirement for Tucson vacation rental owners is to hold a business license and to pay transaction privilege tax.

Obtaining a Tucson business requires submitting some basic information about the business. There is a $25 application fee and a $45 annual renewal fee.

The TPT rate for hotels and assumably short term rentals in Tucson is 6.0% plus $2 per bed per night.

All in all, the lack of Tucson Airbnb regulations means that non-owner occupied and unhosted short term rentals are a viable option for investors.

3. Sedona, Arizona Short Term Rental Laws

The City of Sedona’s short term rental regulations are available in Chapter 5.25 of the City Municipal Code. Sedona uses the same definition of vacation rentals as the State of Arizona.

Running a Sedona Airbnb business requires a valid annual short term rental permit issued by the City. A permit application needs to include the following:

• Rental’s physical address
• Owner’s name, address, phone number, and email
• Owner’s designee’s name, address, phone number, and email, if available
• Certification that the owner’s designee is authorized to act on the owner’s behalf
• Emergency point of contact’s name, address, phone number, and email
• Proof of a valid transaction privilege tax license
• Acknowledge of the owner’s agreement to comply with all applicable laws, regulations, and ordinances
• Permit fee

Sedona short term rental permits are valid for 1 year and need to be renewed prior to expiry. They are non-transferable. Permits can be denied or revoked in case of violations.

Importantly, vacation rentals in single-family residential districts need to be limited to the uses identified in the Sedona Land Development Code for the particular zoning district.

Moreover, Sedona Airbnb properties need to comply with the following use regulations:

• Comply with federal, state, and local laws related to public health and safety, sanitation, solid waste, hazardous waste, tax privilege licensing, property tax registration, traffic control, pollution control, noise, property maintenance, and nuisance abatement
• Prohibit any non-residential use
• Not hold any special event that requires a permit or a license
• Have a valid transaction privilege tax license issued by the State of Arizona
• Meet the minimum standards for habitable structures set in the City Code
• Provide neighbor notification to each single-family residential property adjacent to the property, directly across from the property, and diagonally across the street of the property
• Display the permit number issued by the City in each advertisement of the vacation rental
• Post a notice within 10 feet of the primary entrance inside the property containing the prohibited uses and the emergency point of contact’s information
• Maintain liability insurance of a minimum of $500,000
• Conduct a sex offender background check on all booking guests

Violations are subject to fines starting at $500 and reaching $3,500 for repeated violations.

The Sedona TPT rate is 3.5%.

All in all, despite the permitting requirements, Sedona has very conducive short term rental laws, which makes it a good place to invest in Airbnb in Arizona from a legal point of view.

4. Scottsdale, Arizona Short Term Rental Laws

The City of Scottsdale regulates short term rentals in Ordinance 4566, incorporated under Article IX of the City Code of Ordinances. Scottsdale generally defines vacation rentals as residential properties offered for rent for less than 30 days. They are allowed in apartments, condominiums, townhomes, and single-family neighborhoods as long as they are not prohibited in a private agreement. Guest rooms and guest houses cannot be rented independently of the main house; they have to be rented together with the main house.

Scottsdale Airbnb hosts need to get a vacation rental license issued from the City. License applications require:

• Dwelling unit’s physical address
• Owner’s name, address, phone number, and email
• Owner’s designee’s name, address, phone number, and email, if applicable
• Certification by the owner that the owner’s designee is authorized to act on their behalf
• Emergency point of contact’s name, address, 24/7 phone number, and email
• Agreement by the owner and each designee to comply with all applicable laws, regulations, and ordinances
• Attestation by the owner and each designee that they are not a registered sex offender, have not been convicted of any felony that resulted in death or serious physical injury, and have not been convicted of any felony use of a deadly weapon within the past 5 years
• Proof of a valid transaction privilege tax license
• Proof of lawful presence in the US for individual owners

Vacation rental licenses are valid for 1 year, after which they need to be renewed. They cannot be transferred to another location or another person. Each short term rental requires its own license to operate legally. Licenses can be suspended or revoked in case of violations.

Scottsdale short term rentals need to oblige by the following:

• Comply with all federal, state, and local laws, rules and regulations pertaining to public health, safety, sanitation, solid waste, hazardous waste, tax privilege licensing, residential rental property recording, traffic control, pollution control, noise, property maintenance, and nuisance abatement
• Prevent non-residential use
• Respond to emergencies
• Have primary liability insurance coverage of at least $500,000 unless provided by the online lodging marketplace (Airbnb, Vrbo, etc.)
• Notify all single-family residential properties adjacent to and directly and diagonally across the street from the property or all units on the same building floor in a multi-family residential buildings
• Display the vacation rental license number in all listings
• Provide proper collection containers for garbage
• Have working smoke alarms
• Provide a map of the floor plan displaying safe routes in the event of fire or another emergency, the location of fire detection and suppression equipment, the full property address, the emergency information, and the owner/emergency point of contact information
• Be properly cleaned between stays
• Receive regular pest control treatments of the interior and exterior
• Comply with Scottsdale barrier requirements in case there is a swimming pool, spa, or hot tub accessible to guests
• Limit occupancy to 6 adults and their related dependent children
• Conduct a national sex offender background check of booking persons
• Post a clear notice with application regulations

The combined tax rate for business activities including operating a short term rental business in Scottsdale is 8.05%.

To conclude, similar to other Arizona cities, Scottsdale has very positive short term rental regulations which allow local and out-of-state investors to start an Airbnb business in the city.

5. Lake Havasu City, Arizona Short Term Rental Laws

Lake Havasu City introduced ordinance which establishes rules for and regulates short term rentals, effective as of March 2023. It’s included in Chapter 5.20 of the City Code of Ordinances. Lake Havasu City uses the State of Arizona definition of vacation rentals. Eligible short term rental property types include single-family houses, 1-to-4-unit houses, condominiums, townhouses, cooperatives, timeshares, individual rooms within previously mentioned properties, guest houses, casitas, and mother-in-law quarters.

Airbnb rentals in Lake Havasu City need to have a vacation rental permit, applying for which necessitates:

• Residential property’s physical address
• Owner’s name, address, and phone number
• Owner’s designee’s name, address, and phone number, if applicable
• Emergency point of contact’s name, address, and 24/7 phone number
• Proof of a valid transaction privilege tax license
• Owner’s agreement to comply with all applicable laws, regulations, and ordinances
• Attestation of compliance with required notification
• Evidence of liability insurance for a minimum of $500,000 unless the listing platform provides equal or greater primary liability insurance coverage
• $250 application fee

Licenses remain valid for 1 year, and the annual renewal fee is $250.

The owner needs to adhere to the following operational requirements and standard conditions:

• Comply with all applicable codes regarding fire, building, health and safety, and all other relevant laws
• Be available to respond to complaints in a timely manner
• Ensure that guests do not create unreasonable noise disturbances, engage in disorderly conduct, or violate relevant provisions
• Ensure that trash and refuse is not left stored in public view except in proper containers
• Ensure that noise levels do not exceed stipulated levels
• Comply with the provisions of the Tax Code related to transient occupancy tax
• Prevent the use of the property for non-residential use
• Maintain a current transaction privilege tax license from the Arizona Department of Revenue
• List the transaction privilege tax license number and the local regulatory permit number on all advertisements
• Notify all single-family residential properties adjacent to and directly and diagonally across the street from the short term rental or all multi-family residential building units on the same floor as the property
• Post a notice in the property with applicable rules and emergency point of contact’s information

Violations will be fined with a minimum fine of $500.

The TPT rate for hotels in Lake Havasu City is 2.0%.

To sum up, Lake Havasu City short term rental rules are host-friendly, allowing non-owner occupied vacation rentals in an unrestricted manner.

6. Glendale, Arizona Short Term Rental Laws

The City of Glendale introduced new short term rental regulations as of January 2023 that are included in Section 29.1-41 of the Glendale Code of Ordinances. The city uses the same definition of vacation rentals as Arizona.

Glendale Airbnb rentals require a short term rental license. A license application has to be accompanied by the following:

• Residential property’s physical address
• Owner’s name, address, and phone number
• Each owner’s designee’s name, address, and phone number
• Emergency point of contact’s name, address, and 24/7 phone number
• Proof of a valid transaction privilege tax license
• Owner’s agreement to comply with all applicable laws, regulations, and ordinances
• $100 license fee

It’s important to note that permits are valid for 1 year, which means that they need to be renewed on an annual basis. Each property requires a separate license. Moreover, licenses are non-transferable and non-assignable.

Glendale imposes certain regulations that include:

• Complying with federal, state, and local laws, rules and regulations related to public health, safety, sanitation, solid waste, hazardous waste, tax privilege licensing, advertising requirements, traffic control, pollution control, noise, property maintenance, and nuisance abatement
• Prohibiting non-residential use
• Maintaining liability insurance for at least $500,000 unless the online lodging marketplace offers equal or greater coverage

Violations are subject to penalties that start at $500.

Glendale short term rentals need to pay a combined TPT and transient tax of 15.7%.

In conclusion, Glendale vacation rental laws are very positive for investors that want to buy a property for the sole purpose of renting it out on Airbnb and other similar platforms.

7. Flagstaff, Arizona Short Term Rental Laws

The City of Flagstaff regulates short term rentals in Chapter 3-12 of the City Code, updated in November 2023. The city applies the Arizona definition of vacation rentals for legal and tax purposes.

In Flagstaff, Airbnb properties need to have a STR license in order to operate. 

To apply for a license, the property owner needs to provide the following:

• STR property’s physical address
• Owner’s name, address, phone number, and email
• Owner’s designee’s name, address, phone number, and email
• Emergency point of contact’s name, address, 24/7 phone number, and email
• TPT license number issued by the State of Arizona
• Statement that the owner acknowledges and agrees to comply with all applicable laws, regulations, and ordinances
• Statement that the owner and all owner’s designees are not registered sex offenders, have not been convicted on felony resulting in death or serious physical injury, and have not been convicted of felony use of a deadly weapon within the past 5 years
• Statement that the owner will complete the required neighborhood notification in a timely manner
• Proof of lawful presence in the US
• $175 license fee (to be increased by $5/year on each November 1, starting in 2024)

Flagstaff short term rental licenses are valid for 1 year, after which they need to be renewed after paying an annual renewal fee. They are neither transferable nor assignable.

Vacation rental owners and operators in Flagstaff need to abide by the following rules:

• Respond within 60 minutes in case of emergency
• Not use the property for non-residential use
• Display the STR license number on all ads of the vacation rental
• Post a notice within 10 feet of the primary entrance explaining what is prohibited
• Provide neighborhood notification to each single-family residential property adjacent to and directly across from, diagonally across from, directly behind, and diagonally behind the STR in case of a single-family home rental or on the same floor as the STR in case of a multi-family residential building

Penalties for verified violations range between $500 and $3,500. Licenses can be suspended or revoked in case of major violations.

The TPT rate in Flagstaff is 4.281%.

To conclude, similar to other city-level short term rental laws in Arizona, Flagstaff provides a very positive legal framework from the point of view of Airbnb owners and hosts. This can be a good place for buying a vacation rental property.

Bottom Line

Arizona short term rental laws are very friendly for both local and out-of-state Airbnb investors. Non-owned occupied vacation rentals are allowed and unrestricted in the top short term rental markets across the state. While they require local licenses or permits, these are generally easy and quick to obtain after submitting a few basic documents and paying an annual fee. Nevertheless, before purchasing an investment property to list on Airbnb or Vrbo, investors should check out local regulations to confirm eligibility.