Arizona is one of the 13 states of the Sunbelt region of the USA. Phoenix is the capital of Arizona and the fifth most populous city of the nation. As the average winter temperature of this city never goes below 7-degrees Celsius, Canadian Snowbirds consider Phoenix as their perfect destination to enjoy their winter vacations.
Phoenix is reputed for the amazing growth of the industrial sectors like oil and mining, healthcare, retail, education, construction and utility services. Thus, Canadian Snowbirds own rental properties and engage in residential and commercial rental businesses while enjoying their vacations. In this regard, many of them approach efficient US tax consultants in Phoenix to get effective recommendations to address the non-residents tax issues.
Below, we have discussed some rules, regulations and facts about licenses, permits and tax-related issues required to handle rental businesses in Phoenix.
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Who needs to pay rental taxes?
In the city area, if a person owns three or more residential properties for rental services, then he needs to pay a tax. A broker or a Property Manager has to pay the taxes if the rental properties are not managed by their owner. In this case, the permit or license may be made by that broker or the Property Manager from the part of the owner.
An owner or a broker using one unit of property for commercial rental service and another unit for residential rental service has to pay a certain amount of tax.
Current tax rate on rental properties
If you are running a rental business, you do not need to pay any State or County Tax. Instead, you have to pay a tax of 2% rate on each and every permit fee and rental income.
What are taxable?
Taxes are collected on the gross income of the owner or lessor. The gross income will include some particular amounts paid by tenants like property tax, service charge, non-refundable deposits, and pet fees, among others.
At The Accounting & Tax, we provide necessary information to our Canadian clients to help them get a clear and to the point idea about the US non-residents tax filing requirements. We also suggest how they should handle their passports and visas. We give important recommendations so that they can follow necessary immigration rules and can start their rental businesses in Phoenix legally.