By Lori A. Curtis
Many business owners run their main business on real property that they own through a separate business, with their main business paying rent to occupy the property. In many circumstances, this rental income was subject to a Transaction Privilege Tax (TPT).
However, there may be some tax relief for Arizona property owners who lease property to their businesses. The Arizona Legislature has eliminated the TPT on commercial leases between two businesses of any kind with at least 80% common ownership.
The exemption does not take effect until September 13, 2013 at the State and County level. However, most cities have stopped imposing these taxes as of July 1, 2013. If you have been paying these taxes and you believe you qualify, you can apply for the exemption with the City in which you are the lessor of commercial real estate.
Many cities already have the application packet online while others are developing their application process. In most cases, you will need to fill out an application and submit supporting documentation, however the tax savings to you may be significant. We would be happy to assist you in the process. Please feel free to contact us to meet with an attorney to assist you.