Scottsdale Short Term Rental Regulation: A Guide For Airbnb Hosts

Starting a Short Term Rental Business in Scottsdale

Scottsdale, Arizona is a popular tourist destination known for its warm weather, world-class golf courses, luxury resorts, and vibrant nightlife. Located in the Phoenix metropolitan area, Scottsdale attracts millions of visitors each year who come to enjoy the city's abundant sunshine, upscale shopping, fine dining, and outdoor recreation opportunities.

Many property owners in Scottsdale operate short-term rentals through platforms like Airbnb and Vrbo to earn extra income from the city's booming tourism industry. Short-term rentals can be a lucrative investment in Scottsdale, with average daily rates ranging from $200 for a small condo to over $1,000 for a luxury home during peak season.

However, in recent years, Scottsdale has implemented increasingly strict regulations on short-term rentals in response to resident complaints about noise, parties, parking issues and the proliferation of investor-owned vacation rentals in residential neighborhoods.

As of January 2023, all short-term rental owners in Scottsdale must obtain a city license and follow several new requirements aimed at mitigating the impact of vacation rentals on the community. Failure to comply with the city's short-term rental ordinance can result in significant fines and legal action.

Short Term Rental Licensing Requirement in Scottsdale

Scottsdale's Ordinance 4655, which was unanimously passed by the city council in late 2022, stipulates that all short-term and vacation rental owners must obtain and maintain an annual city license for each property they rent out for less than 30 consecutive days.

The licensing fee is $250 per property per year, regardless of how many days the property is rented. All fees collected go toward covering the city's costs to administer and enforce the short-term rental program, including dedicated staff, a 24/7 complaint hotline, and software to track licenses and violations.

Existing short-term rentals had to obtain a license by January 8, 2023. New short-term rental properties must be licensed before being advertised or offered for rent. The city estimates there are around 5,000 short-term rentals operating in Scottsdale, which represents about 5% of the city's total housing units.

To apply for a short-term rental license, owners must first obtain a Transaction Privilege Tax (TPT) license from the Arizona Department of Revenue. The TPT license number is required for the Scottsdale license application.Licenses must be renewed annually and are non-transferable. If a licensed property is sold, the new owner must apply for a new license.

Required Documents for Scottsdale Short Term Rentals

To apply for a Scottsdale short-term rental license, owners must provide the following information and documents through the city's online portal:

• Owner name, address, phone number and email (or statutory agent info if owned by an LLC or other entity)
• Property address and Maricopa County Assessor parcel number
• Proof of valid TPT license from the Arizona Department of Revenue
• Proof of $500,000 in general liability insurance coverage
• Name, address and 24/7 phone number for a designated emergency contact (must be available to respond on-site within 1 hour)
• Attestation of compliance with all relevant laws and ordinances
• Attestation that the owner, manager and emergency contact are not registered sex offenders or convicted felons
• Proof of neighbor notification within 30 days of licensing

The city may request additional documentation as needed to verify information in the application. Providing false information or operating without a license can result in denial, suspension or revocation of a short-term rental license.

Scottsdale Short Term Rental Taxes

Short-term rental owners in Scottsdale must obtain a Transaction Privilege Tax (TPT) license from the Arizona Department of Revenue and pay state, county and city taxes on their rental income.As of 2023, the applicable tax rates for short-term rentals in Scottsdale are:

• State TPT: 5.5%
• Maricopa County transient lodging tax: 1.77%
• City of Scottsdale transient occupancy tax: 5%
• City of Scottsdale additional hotel tax: 2%

The combined tax rate of 14.27% must be collected from guests and remitted to the appropriate authorities. Owners who only book through an online platform like Airbnb that collects and remits taxes on their behalf must still file a monthly tax return with the state showing their gross rental receipts and a deduction for the amount collected by the platform using deduction code 775.

Failure to obtain a TPT license or pay required taxes can result in fines, interest, and legal action by state and local authorities. Scottsdale requires proof of TPT licensing to obtain a short-term rental license.

Scottsdale-wide Short Term Rental Rules

In addition to licensing and taxation, Scottsdale has several citywide rules that all short-term rental owners and operators must follow:

• Occupancy is limited to a maximum of 6 adults (or 2 adults per bedroom, whichever is less), plus their minor children. Advertising a property for more than 6 adults is prohibited.
• Rentals cannot be used for non-residential purposes that would normally require a permit, such as restaurants, banquets, weddings, parties or other special events.
• Owners must post a city-provided notice inside the rental near the front door with the license number, 24/7 contact info, location of fire extinguishers, and waste disposal rules. Tampering with the notice is prohibited.
• Sex offender and background checks are required for the owner, manager, emergency contact and all adult guests. Owners must keep records of compliance.
• Properties must meet all applicable building, fire, health and safety codes. Owners are responsible for routine cleaning, sanitizing and pest control between guests.
• Guest houses, casitas and other accessory dwelling units cannot be rented separately from the main house unless they have separate utility meters and a separate address.
• Owners must provide one off-street parking space per bedroom, not including the garage, and cannot advertise parking on city streets.
• Quiet hours are from 10pm to 7am. Noise that can be heard beyond the property line is prohibited during quiet hours.
• Owners must keep written rental agreements with the name, address and phone number of all guests and the dates of stay. Records must be provided to the city upon request.
• Owners must provide guests with a copy of the city's short-term rental rules and information on local laws regarding parking, noise, trash collection and other neighborhood issues.

Violations of any of these rules can result in fines starting at $500 for the first offense, $1,000 for the second offense, and $2,000 plus possible license suspension or revocation for the third offense within a 12-month period.

Does Scottsdale strictly enforce STR rules?

Scottsdale has struggled to enforce its strict occupancy limit of 6 adults per short-term rental, with many listings advertising space for 8-16 people. Residents have complained that the city does not adequately respond to reports of overcrowding, noise and parking violations at vacation rentals.

However, Scottsdale has made significant progress on licensing compliance in the first year of the new ordinance. As of December 2023, about 80% of the city's estimated 5,000 short-term rentals had obtained a license or were in the process, up from less than 20% in January.

The city has issued nearly 2,500 citations to unlicensed properties, with fines starting at $1,000 per violation. Calls to police about short-term rental nuisance parties are on track to increase 60% in 2023 compared to 2022, which officials attribute to better data on rental locations rather than properties becoming more disruptive.

While Scottsdale allows short-term rentals, the regulations are more restrictive than some other Arizona cities. Hosts on Reddit and Bigger Pockets report operating profitable STRs in Scottsdale but advise carefully following the rules to avoid violations and maintain good neighbor relations.

How to Start a Short Term Rental Business in Scottsdale

• Research local zoning laws and HOA rules to ensure short-term rentals are allowed at your property. Some Scottsdale neighborhoods prohibit or restrict vacation rentals.
• Obtain a Transaction Privilege Tax (TPT) license from the Arizona Department of Revenue. You will need this to apply for a Scottsdale license.
• Apply for a Scottsdale short-term rental license for each property through the city's online portal. The annual fee is $250 per property.
• Secure at least $500,000 in general liability insurance and provide proof to the city. Your regular homeowners or landlord insurance may not cover short-term rentals.
• Designate a 24/7 emergency contact who can respond on-site within 1 hour. This can be the owner, property manager, or a third-party service.
• Notify neighbors within 300 feet of your rental property by mail within 30 days of receiving your Scottsdale license. The notice must include your license number and 24/7 contact info.
• Post the city-provided notice inside your rental property near the front door with the license number, contact info, fire extinguisher location, and waste disposal rules.
• Provide one off-street parking space per bedroom, not including the garage. Do not advertise street parking for guests.
• Ensure your property meets all building, fire, health and safety codes. Schedule routine cleaning, sanitizing and pest control between guests.
• Keep written rental agreements with guest names, addresses, phone numbers and dates of stay. Provide a copy of the city's short-term rental rules to all guests.
• Collect and remit all applicable state, county and city taxes on your rental income. File monthly returns with the Arizona Department of Revenue.
• Respond promptly to any neighbor complaints or city violations. Maintain open communication with city officials and work to be a good neighbor.

Who to contact in Scottsdale about Short Term Rental Regulations and Zoning

For questions about Scottsdale's short-term rental requirements, contact:

Short-Term Rentals Hotline
Phone: 480-312-7368
Email: ShortTermRentalsHotline@ScottsdaleAZ.gov

For questions about zoning, building permits, or accessory dwelling units, contact:

Scottsdale Planning and Development Services
Phone: 480-312-7000
Email: PlanningInfo@ScottsdaleAZ.govMore information and resources for short-term rental owners and operators in Scottsdale:

• Scottsdale Short-Term Rental License Application: https://eservices.scottsdaleaz.gov/bldgresources/Cases/ShortTermRental
• Scottsdale Short-Term Rental Ordinance 4655: https://www.scottsdaleaz.gov/Asset88702.aspx
• Scottsdale Vacation and Short-Term Rentals Page: https://www.scottsdaleaz.gov/codes/vacation-short-term-rentals
• Arizona Department of Revenue TPT Licensing: https://azdor.gov/transaction-privilege-tax/tpt-license/applying-tpt-license

What do Airbnb hosts in Scottsdale on Reddit and Bigger Pockets think about local regulations?

• "Scottsdale has some of the strictest Airbnb regulations in the state. Make sure you dot your i's and cross your t's or you will get fined. The city is not messing around with enforcement." (Reddit)
• "I have a successful Airbnb in Scottsdale but it took a lot of work to get licensed and set up legally. The city is cracking down hard on party houses and unlicensed rentals. You really have to stay on top of it." (Bigger Pockets)
• "If you follow Scottsdale's STR rules, you can still make good money, especially during peak season. Just don't try to skirt the occupancy limits, throw big events, or annoy the neighbors with noise and parking issues." (Bigger Pockets)
• "As a newbie, I'm concerned about losing money on a rental arbitrage deal in Scottsdale given all the competition and strict rules. Experienced hosts say it's doable if you carefully follow the regs but not easy. Definitely do your homework before jumping in." (Bigger Pockets)
• "We've been operating STRs in Scottsdale for 5 years and the new licensing process was a headache but not terrible. The city's communication has been pretty good. Just expect to pay a lot in fees and taxes and keep meticulous records." (Bigger Pockets)

In summary, while Scottsdale allows short-term rentals, the city has implemented increasingly strict regulations in recent years to address resident complaints about noise, parties, parking and the proliferation of vacation rentals in residential areas.

Hosts must obtain a city license for each property, notify neighbors, limit occupancy to 6 adults, provide off-street parking, and use the property only for lodging, not events. The city has stepped up enforcement, conducts background checks, requires 24/7 local contacts, and issues hefty fines for violations.

Scottsdale's rules are more restrictive than some other Arizona cities, but many hosts report operating profitable short-term rentals while carefully complying with the regulations and being good neighbors.

Thorough research and due diligence is advised before starting a short-term rental business in Scottsdale. Prospective hosts should understand all state and local requirements, be prepared to pay for licensing, insurance and taxes, maintain detailed records, and proactively communicate with neighbors and city officials to avoid complaints and violations.

With the right property, pricing, amenities and customer service, short-term rentals can still be a lucrative investment in Scottsdale, but owners must be willing to play by the rules in an increasingly regulated market. Staying informed, adaptable and professional is key to success in Scottsdale's competitive vacation rental industry.