HB2362 - Property classification; short-term rentals

REFERENCE TITLE: property classification; short-term rentals State of Arizona House of Representatives Fifty-seventh Legislature Second Regular Session 2026 HB 2362 Introduced by Representatives Crews: Bliss, Contreras P, Liguori, Villegas AN ACT amending sections 33-1902, 42-12001, 42-12004, 42-12052 and 42-12053, Arizona Revised Statutes; relating to property classification. (TEXT OF BILL BEGINS ON NEXT PAGE) Be it enacted by the Legislature of the State of Arizona: Section 1. Section 33-1902, Arizona Revised Statutes, is amended to read: START_STATUTE 33-1902. Residential rental property; recording with the assessor; agent designation; civil penalty; fee A. An owner of residential rental property shall maintain with the assessor in the county where the property is located information required by this section in a manner to be determined by the assessor. The owner shall update any information required by this section within ten days after a change in the information occurs. The following information shall be maintained: 1. The name, address and telephone number of the property owner. 2. If the property is owned by a corporation, limited liability company, partnership, limited partnership, trust or real estate investment trust, the name, address and telephone number of any of the following: (a) For a corporation, a corporate officer. (b) For a partnership, a general partner. (c) For a limited liability company, the managing or administrative member. (d) For a limited partnership, a general partner. (e) For a trust, a trustee. (f) For a real estate investment trust, a general partner or an officer. 3. The street address and parcel number of the property. 4. The year the building was built. 5. if the property is rented for periods of less than thirty days. B. An owner of residential rental property who lives outside this state shall designate and record with the assessor a statutory agent who lives in this state and who will accept legal service on behalf of the owner. The owner shall designate the agent in a manner to be determined by the assessor. The information shall include the name, address and telephone number of the agent. C. Residential rental property shall not be occupied if the information required by this section is not on file with the county assessor. If the owner has not filed the information required by this section with the county assessor and the residential rental property is occupied by a tenant and the tenant chooses to terminate the tenancy, the tenant shall deliver to the landlord, owner or managing agent of the property a written ten day days' notice to comply with this section. The notice shall be delivered by certified mail, return receipt requested, or by hand delivery. If the owner does not comply with this section within ten days after receipt of receiving the notice, the tenant may terminate the rental agreement and the landlord shall return all prepaid rent to the tenant. Security deposits shall be returned in accordance with section 33-1321, subsection D. The landlord shall return those monies by certified mail, return receipt requested, or by hand delivery to the tenant within ten days after the termination of the rental agreement. This subsection applies to any existing lease and to any new lease after August 25, 2004. Notwithstanding this subsection, an owner is in compliance with this subsection only if the owner had filed the information required by subsection A of this section with the county assessor. D. All records, files and documents that are required by this section are public records. E. For residential rental property that is acquired by an owner after the date of the notice of assessed valuation and the notice prescribed by section 42-15103 and until the issuance of the next notice of assessed valuation, a city or town shall assess a civil penalty of one thousand dollars $1,000 against a person who fails to comply with this section, plus an additional one hundred dollars $100 for each month after the date of the original violation until compliance occurs. The court shall not suspend any portion of the civil penalty provided by this subsection. F. Notwithstanding subsection E of this section, if a person complies within ten days after receiving the complaint that notices the violation, the court shall dismiss the complaint and shall not impose a civil penalty. G. Except for newly acquired residential rental property as prescribed by subsection E of this section, if a residential rental property owner fails to register with the county assessor as prescribed by this section, the city or town may impose a civil penalty in the amount of one hundred fifty dollars per day $150 for each day of violation after the date of the most recent notice of assessed valuation and the notice prescribed by section 42-15103. If a person complies within ten days after receiving the notice from the county assessor, the court shall dismiss the complaint and shall not impose a civil penalty. H. In carrying out this section, the county assessor shall have immunity as provided in section 12-820.01. I. The county assessor may assess a fee of not more than ten dollars $10 for each initial registration and each change of information in the registry. J. On request from a city or town the county assessor shall provide the most current list of all registered rental property owners within the city's or town's boundaries. END_STATUTE Sec. 2. Section 42-12001, Arizona Revised Statutes, is amended to read: START_STATUTE 42-12001. Class one property For the purposes of taxation, class one is established consisting of the following subclasses: 1. Producing mines and mining claims, personal property used on mines and mining claims, improvements to mines and mining claims and mills and smelters operated in conjunction with mines and mining claims that are valued at full cash value pursuant to section 42-14053. 2. Standing timber that is valued at full cash value. 3. Real and personal property of gas distribution companies, electric transmission companies, electric distribution companies, combination gas and electric transmission and distribution companies, and companies engaged in the generation of generating electricity that are valued at full cash value pursuant to section 42-14151. 4. Real and personal property of airport fuel delivery companies that are valued pursuant to section 42-14503. 5. Real and personal property that is used by producing oil, gas and geothermal resource interests that are valued at full cash value pursuant to section 42-14102. 6. Real and personal property of water, sewer and wastewater utility companies that are valued at full cash value pursuant to section 42-14151. 7. Real and personal property of pipeline companies that are valued at full cash value pursuant to section 42-14201. 8. Real and personal property of shopping centers that are valued at full cash value or pursuant to chapter 13, article 5 of this title, as applicable, other than property that is included in class nine. 9. Real and personal property of golf courses that are valued at full cash value or pursuant to chapter 13, article 4 of this title. 10. All property, both real and personal, of manufacturers, assemblers or fabricators, other than property that is specifically included in another class described in this article, that is valued under this title. 11. Real and personal property that is used in communications transmission facilities and that provides public telephone or telecommunications exchange or interexchange access for compensation to effect two-way communication to, from, through or within this state. 12. Real property and improvements that are devoted to any other commercial or industrial use, other than property that is specifically included in another class described in this article, and that are valued at full cash value. 13. Personal property that is devoted to any other commercial or industrial use, other than property that is specifically included in another class described in this article, and that is valued at full cash value. 14. Real and personal property of electric cooperatives that are valued at full cash value pursuant to section 42-14159. 15. Real and personal property and improvements that are rented to lodgers for periods of less than thirty days for a total of more than one hundred eighty days in a calendar year and that are valued at full cash value, except: ( a ) Property that is occupied by the owner of the property as the owner's primary residence that is included in class three. ( b ) Property for residential purposes that is rented and that is included in class four. END_STATUTE Sec. 3. Section 42-12004, Arizona Revised Statutes, is amended to read: START_STATUTE 42-12004. Class four property A. For the purposes of taxation, class four is established consisting of: 1. Real and personal property and improvements to the property that are used for residential purposes, including residential property that is owned in foreclosure by a financial institution, that is not otherwise included in another classification and that is valued at full cash value. The homesite that is included in class four may include: (a) Up to ten acres on a single parcel of real property on which the residential improvement is located. (b) More than ten, but not more than forty, acres on a single parcel of real property on which the residential improvement is located if it is zoned exclusively for residential purposes or contains legal restrictions or physical conditions that prevent the division of the parcel. For the purposes of this subdivision, "physical conditions" means topography, mountains, washes, rivers, roads or any other configuration that limits the residential usable land area. 2. Real and personal property and improvements to the property that are used for residential purposes and solely leased or rented, that are not included in class one, two, three, six, seven or eight and that are valued at full cash value. 3. Child care facilities that are licensed under title 36, chapter 7.1 and that are valued at full cash value. 4. Real and personal property and improvements to property that are used to operate nonprofit residential housing facilities that are structured to house or care for persons with disabilities or who are at least sixty-two years of age and that are valued at full cash value. 5. Real and personal property and improvements that are used to operate licensed residential care institutions or licensed nursing care institutions that provide medical services, nursing services or health-related services and that are structured to house or care for persons with disabilities or who are at least sixty-two years of age and that are valued at full cash value. 6. Real and personal property consisting of not more than eight rooms of residential property that are leased or rented to transient lodgers, together with furnishing not more than a breakfast meal, by the owner who resides on the property and that is valued at full cash value. 7. Real and personal property that consists of residential dwellings maintained for occupancy by agricultural employees as a condition of employment or as a convenience to the employer, that is not included in class three and that is valued at full cash value. The land associated with these dwellings shall be valued as agricultural land pursuant to chapter 13, article 3 of this title. 8. Real property and improvements to property constituting common areas that are valued pursuant to chapter 13, article 9 of this title. 9. Real and personal property that is defined as timeshare property by section 32-2197 and valued pursuant to chapter 13, article 10 of this title, except for any property used for commercial, industrial or transient occupancy purposes and included in class one to the extent of that use. 10. Real and personal property and improvements that are used for residential purposes , and that are leased or is rented to lodgers for periods of less than thirty days for a total of one hundred eighty days or less in a calendar year and that are valued at full cash value , except for: (a) Property that is occupied by the owner of the property as the owner's primary residence and that is included in class three. (b) Property that is used for commercial purposes and that is included in class one pursuant to section 42-12001, paragraph 15 . 11. Low-income multifamily residential rental properties that are valued pursuant to chapter 13, article 13 of this title. 12. Real and personal property and improvements to property of a guest ranch that meets the requirements prescribed in chapter 13, article 12 of this title and that is included in the Arizona dude ranch heritage trail program established by section 41-867 and that are valued at full cash value. B. Subsection A, paragraphs 4 and 5 of this section do not limit eligibility for exemption from taxation under chapter 11, article 3 of this title. END_STATUTE Sec. 4. Section 42-12052, Arizona Revised Statutes, is amended to read: START_STATUTE 42-12052. Review and verification of class three property; civil penalty; appeals A. Each county assessor shall review assessment information, on a continuing basis, to ensure proper classification of residential dwellings. The assessor may enter into intergovernmental agreements with the department for an exchange of information to ensure a coordinated and comprehensive review and identification of property that may be rented while classified as class three pursuant to section 42-12003. B. If the assessor has reason to believe that a parcel of property that is classified as class three pursuant to section 42-12003 is not the owner's primary residence or as a qualifying family member member's residence pursuant to section 42-12053, the assessor shall notify the owner, in a form prescribed by the department as provided by subsection D of this section, and request that the owner respond as to whether the property meets the requirements of section 42-12003 or 42-12053, is a secondary residence or is used as a rental property. If the owner fails to respond to the assessor within thirty days after the notice is mailed, the assessor shall mail the owner a final notice within thirty days requesting that the owner provide information as to whether the property meets the requirements of a primary residence, a secondary residence or is used as a rental property. If the owner fails to respond to the assessor within fifteen days after the final notice is mailed, the assessor shall: 1. Reclassify the property as class one pursuant to section 42-12001, paragraph 15 or class four pursuant to section 42-12004 . In addition to other appeal procedures provided by law, the owner of the property that is reclassified as class four under this paragraph may appeal the reclassification to the county board of supervisors within thirty days after the notice of classification is mailed. If [Text truncated for display. Full text available on LegiScan.]