Arizona tax rules exclude certain property rentals from taxable income

The personal-property rental tax does not apply to several listed rental activities. Covered activities include rentals between related businesses, coin-operated cleaning machines, qualifying environmental technology equipment, aviation training equipment at certain nonprofit schools, certified ignition interlock devices, utility-pole attachment space, and roadside billboards. Each exclusion applies only when its listed statutory conditions are met. Some exclusions depend on related laws, qualifying institutions, or the type and use of the property. The rule applies to taxable periods beginning on or after the first day of the month following the general effective date.

Businesses calculate the personal-property rental tax after leaving certain receipts out of the taxable amount. The deductions cover qualifying leases that would have been tax-exempt purchases, certain vehicle fees and fuel sales, some vehicle leases, and a dealer’s first transferred lease payment. The applicable statutory conditions must be met. Some amounts must be separately identified and billed to the lessee. The listed vehicle, fuel, resale, and related-business rules continue to depend on the referenced statutes. The rule applies to taxable periods beginning on or after the first day of the month following the general effective date.