SignalsAZ.com Prescott News Podcast - Prescott Drops Residential Rental Tax

Episode Date: January 13, 2025

Send us a text and chime in!The City of Prescott, Arizona, eliminated its transaction privilege tax (TPT) on long-term residential rentalseffective January 1, 2025. This means property owners no longer need to collect or remit city TPT for such rentals, although they must still register with the county assessor. The change only impacts long-term residential propertiesand does not affect other types of rentals like vacation rentals or commercial properties, which remain subject to TPT. The Arizona Department of Revenue closed TPT licenses specifically for residential rentals on December 31, 2024. Further information is available from the city's tax compliance analyst.Read the full article on SignalsAZ.com: https://www.signalsaz.com/articles/prescott-drops-residential-rental-tax/Check out the CAST11.com Website at: https://CAST11.com Follow the CAST11 Podcast Network on Facebook at: https://Facebook.com/CAST11AZFollow Cast11 Instagram at: https://www.instagram.com/cast11_podcast_network

ever dream of, you know, owning rental property, but then get totally bogged down in all those tax details. It's a headache great. It can be, yeah. Well, what if I told you there's a spot in Arizona where things just got a whole lot simpler for landlords? Oh, that sounds interesting. We're talking Prescott, Arizona. He recently made a big change to their tax code, and it could be a game changer for anyone looking to invest in rental property there. Big changes always shake things up. Exactly. So we're diving deep today into an article from Signalsaz.com, a local news outlet. It's titled Prescott drops residential rental tax. And let me tell you, that title doesn't even begin to cover all the juicy details we're going to unpack.

Juicy is right. This one's got some layers. So to kick things off, let's talk about the big change that's got everyone buzzing. All right, lay it on me. Starting January 1st, 2025, the city of Prescott said, Sayanara to the transaction privilege tax on long-term residential rentals. Hoof, gone. Wait, hold on. For folks who aren't super familiar with Arizona taxes, maybe we should back up a sec. What exactly is a transaction privilege tax anyway? Oh, you're totally right. It's easy to get lost in all the jargon. So basically, PPPT is Arizona's version of a sales tax.

Right. But here's the catch. It doesn't just apply to goods. It also applies to services, including renting up property. Yeah. So up until this year, landlords and Prescott were required to collect this TPT from their tentations. every month and then pass it along to the city. Exactly. But as of this year, if you own a rental property in Prescott, guess what? You get to keep that extra chunk of change that would have gone to the city. More money in your pocket.

Cheching. It seems like a pretty bold move, right? Dropping a whole tax revenue stream like that? It definitely raises some eyebrows. The article doesn't explicitly dive into the city's motivations, but we can speculate a bit. Okay. Put on your detective hat. My favorite part.

While one possibility is that Prescott's trying to attract more long-term. residents. Making it financially easier for landlords, that could lead to more rental options for people looking to put down roots. It makes sense. You know, encouraging families and individuals to settle down rather than just passing through. Exactly. But there might be another angle at play here too. Oh, spill the tea. What about the whole short-term rental boom, Airbnb and all that? This tax change only applies to long-term rentals. So maybe Prescott's trying to subtly discourage those short-term vacation rentals that have been causing a stir in some communities. That's a really sharp observation. So this tax change could be a way to shape Prescott's housing landscape in a couple of

ways at once. Two birds, one tax break. But before anyone gets too excited, there's a big caveat here. Oh, right, right. It's important to remember that this change doesn't apply to everyone. Yeah, this isn't a free-for-all. If you're running a hotel, motel, or anything like that, you're still on the hook for TPP. Same goes for folks renting out commercial properties. Basically, this is specifically targeting long-term residential rentals. That's where the city wants to focus its tax incentives. Right on. Laser focus. So if you've got one of those long-term rentals in Prescott and you're listening right now, you might be wondering, what about my TPP license? Good question. What happens to that? Well, the Arizona Department of Revenue is already on top of it. They automatically closed TPP licenses for residential rentals at the end of last year. So no need to worry about renewing that anymore. That's pretty streamlined, actually.

But, and this is important, if you need to file for prior periods, you can still do that online. Always got to tie up loose ends, right? Exactly. And speaking of tying up loose ends, even though this tax change might seem pretty straightforward, it's always smart to double-check everything and make sure you're in compliance. Couldn't agree more. When in doubt, talk to a tax professional. They can guide you through any specifics and help you avoid any hiccups.

Solid advice. Now let's zoom out a bit. think about the bigger picture. What do you think? Could this move by Prescott spark a trend? Could we see other Arizona cities following suit? Hmm, that's the million dollar question, isn't it? If Prescott starts seeing a boom in long-term rental investments and their housing market stabilizes, you can bet other cities will be watching closely. It's like a domino effect, potentially. Exactly. And it could have a ripple effect on the entire state's rental market. Who knows, maybe Arizona will become the new landlord-friendly

Haven. That would certainly be an interesting development. Now, for all you investors out there listening, this new tax structure in Prescott definitely adds a whole new layer to consider. It's like a new piece of the puzzle when you're evaluating potential markets. Lower taxes, that means potentially higher returns, right? Right. And with all the other perks Prescott has to offer, this could be the tipping point that makes it your next investment hotspot. So there you have it, folks. Prescott, shaking things up in the rental market will leave you to ponder all the possibilities. And if you want to dive deeper into the specifics, be sure to check out that full article on signalsaz.com. Don't forget, knowledge is power.

Thanks for joining us on this deep dive. We'll catch you next time.