How to navigate taxes for Phoenix-area homeowners renting out their place for the big events

PARADISE VALLEY, AZ (3TV/CBS 5) — A recent social media post caught a lot of people’s attention. “So you live in Arizona? You want to make a lot of money during the Super Bowl but you don’t have a rental property? I’ve got you,” Kara Beckmann promised in her Instagram video. The interior designer and real estate expert explained that the so-called Augusta Rule allows homeowners to rent their home, up to 14 days a year, without having to report that income on their individual tax return.

“[The post] had a lot of engagement, and I’m surprised how many people had never heard of this rule before because it has been a rule for years and years,” Beckmann said during an interview with On Your Side at an Airbnb property she renovated in Paradise Valley.

The Augusta Rule got its name thanks to some homeowners in Augusta, Georgia, who wanted to rent out their homes during the Masters Tournament. “They basically wanted to rent their property but not have it be considered a business,” Beckmann said. “And so, the Augusta Rule was born and now we can use it in all 50 states and it allows homeowners to do just that: capitalize on these great events.”

Kody Thompson lives in Tampa Bay, and as soon as Tom Brady’s Buccaneers punched their ticket to the Super Bowl in 2021, he and his roommate decided to rent out their apartment. “I said, ‘Hey! We’ve got to post this right now.’ So literally took pictures, posted it, put it up and it went for almost $3,000 for Super Bowl weekend,” Thompson said. “I was posting, ‘Thank you, Tom Brady for paying my rent!’”

In Arizona, there’s a catch. According to Rebecca Wilder, a spokeswoman for the Arizona Department of Revenue, there are taxes on short-term rentals, no matter how short-term the rental may be. “Income from short-term residential rental is subject to transaction privilege tax. That’s often referred to as a sales tax, so if you’re planning to rent out your home, you need to apply for a seasonal TPT license,” Wilder said.

You can apply for a seasonal TPT license online at AZtaxes.gov. If you’re renting your house for the Super Bowl, your temporary TPT must be active for the month of February, according to ADOR, and once you’re done renting out your place, it’s important to cancel the TPT. You should also check in with your city or town. Many now require registration and some have municipal taxes as well. “Each city has their own requirements for residential rental properties,” Wilder said. “And you may need to file for a business license through the city.”

If you’ve decided to rent out your place, you must get it ready. “I think the tip would be to really clear out the clutter,” Beckmann said. “I would definitely make sure you have a coffee pot, a toaster, some of those daily necessities available to the guest. But you don’t have to make it look Airbnb-worthy to have it attract guests. The location is really important.” And it doesn’t get any better than the Valley in February.

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