Suspicious Taxing Practice on Apartment Rentals

[azjack]

"The property had 7 rentals. I assumed it was a tax the owner was required to pay and didn't mind paying it."

Yes, the person leasing out the house (corporation, individual) is the actual responsible party for paying. Frankly, if I were trying to rent something out, I would just charge what the market would bear and not worry about tacking on the tax to the lease. If it is not brought up early enough, it might rub some people the wrong way. It is just a cost of doing business.

If it is tacked on, people just have to decide if their rental is worth $816.00 (versus $800 in this example), and then act accordingly. When it is brought up after negotiations, it can be seen as nickel and diming the customer and might kill the deal.

[roosevelt]

This might put to rest that people renting do not have to worry about property tax; not only do renters pay property tax for the landlord, they get hit with a renter's tax and common area maintenance charges. Next time renters think they can vote for all the school bonds because they do not have a house, think again.

[azjack]

"This might put to rest that people renting do not have to worry about property tax; not only do renters pay property tax for the landlord, they get hit with a renter's tax and common area maintenance charges. Next time renters think they can vote for all the school bonds because they do not have a house, think again."

I rent and vote against all tax increase measures. Nobody gets hit with paying this tax (as a separate line item) or HOA/condo/maintenance fees unless they agree to them in advance. It is all a matter of negotiation. If I pay money to have a residence, it is irrelevant to me if the person I am paying uses the money to pay their taxes or to buy little outfits for their cats.

[Ragnar]

I've never heard of an apartment rental tax before, but I wouldn't worry about 2% in AZ. I pay $300 per month in property taxes in WI for a small home, so 2% extra per month for a short-term living situation during a transition to AZ doesn't sound all that bad.

[PacificFlights]

Check with the taxing people, but I know in some places, if the rent is $2, you pay taxes on $2. If the rent is $1, you pay taxes on $1. If they lower the payment due to $1 but the rent is officially $2, (special break, move in special) the tax is still on $2. It's like when you go to a store and get a buy 1 get one free, the total is both items, tax assessed on both items, and the cost of the second is deducted afterwards.

[roosevelt]

Originally Posted by PacificFlights

Check with the taxing people, but I know in some places, if the rent is $2, you pay taxes on $2. If the rent is $1, you pay taxes on $1. If they lower the payment due to $1 but the rent is officially $2, (special break, move in special) the tax is still on $2. It's like when you go to a store and get a buy 1 get one free, the total is both items, tax assessed on both items, and the cost of the second is deducted afterwards.

Not to change the subject too much but how about rebates? You buy a stereo for $300 with a $100 mail in rebate but you paid tax on the whole $300.

[AZDesertBrat]

Originally Posted by azjack

Yes, the person leasing out the house (corporation, individual) is the actual responsible party for paying. Frankly, if I were trying to rent something out, I would just charge what the market would bear and not worry about tacking on the tax to the lease. If it is not brought up early enough, it might rub some people the wrong way. It is just a cost of doing business.

If it is tacked on, people just have to decide if their rental is worth $816.00 (versus $800 in this example), and then act accordingly. When it is brought up after negotiations, it can be seen as nickel and diming the customer and might kill the deal.

It was stated in the lease what the rent and the tax amount was. It's been the 'rule' up here for so long we just expect it when we rent a place. I would do as you say and just rent the place out and take the taxes out of the rent, etc.. The place I rented was "worth it".