Should you sell your house or rent it out? Rent it if the rent covers your full costs, you have a low-rate mortgage worth keeping, and you're ready for landlord duties. Sell if you need the equity, want a clean break, or want to protect the IRS home sale exclusion, which requires 24 months of ownership and use in the 5 years before the sale.
What's different in Arizona in 2026? Two things work in a landlord's favor and two add paperwork. Cities no longer charge rental sales tax on long-term residential rentals (since Jan. 1, 2025). But you must register the rental with the county assessor, and a registered rental loses a property tax credit that owner-occupied homes get.
Data note: Tax exclusion rules come from IRS Publication 523. Registration rules come from A.R.S. 33-1902 and the Maricopa County Assessor. Rental TPT changes come from the Arizona Department of Revenue, and deposit limits from A.R.S. 33-1321. General information, not tax or legal advice.
Start With the Math
Compare monthly rent against your true monthly cost:
- Mortgage payment (principal, interest, taxes, insurance)
- HOA dues, if any
- Landlord insurance, which differs from a homeowner policy; see homeowners insurance costs in Arizona
- Repairs and reserves for AC, roof and appliances
- Vacancy between tenants
- Management fees if you hire a property manager
For a rough local benchmark, the Census Bureau's 2020-2024 American Community Survey puts median gross rent at $2,013 in Scottsdale and $1,582 in Phoenix. Your home's rent will depend on its size, condition and location, so get a rental analysis for your address.
The Tax Trade-Off
Selling Your Main Home (IRS Pub. 523)
- Exclude up to $250,000 of gain, or $500,000 for married couples filing jointly
- You must have owned and lived in the home at least 24 months in the 5 years before the sale
- Rent it too long and you can lose eligibility. Know your date.
Renting It First
- Depreciation taken after May 6, 1997 can't be excluded; it's recaptured when you sell
- Keep careful records of rent, expenses and improvements
- More on Arizona's side: Arizona capital gains tax on a home sale
Arizona Landlord Requirements
Register the Rental (A.R.S. 33-1902)
- Register with the county assessor: owner name, address, phone, property address and parcel, and year built
- Update within 10 days of any change
- Out-of-state owners must name an Arizona statutory agent
- The statute says the property shall not be occupied if the information isn't on file
Expect a Higher Tax Bill (Maricopa County Assessor)
- A rental to non-family tenants is Legal Class 4.2
- Registration doesn't change the assessment ratio, but Class 4.2 rentals don't get the State Aid to Education Tax Credit, which may increase your bill
- If a qualified family member lives there as a primary residence, it's Class 3.2
Rental Sales Tax Is Gone for Long-Term Rentals (ADOR)
- City residential rental TPT (stays of 30 days or more) ended Jan. 1, 2025
- Licenses with only residential rental activity were canceled automatically
- Short-term rentals are different; see Scottsdale short-term rental rules
Security Deposits (A.R.S. 33-1321)
- Maximum 1.5 months' rent, though tenants may voluntarily prepay rent
- The purpose of any nonrefundable fee must be stated in writing
- After move-out and a tenant's demand: an itemized list of deductions within 14 days, excluding weekends and legal holidays
Questions to Settle Before You Decide
- Does your mortgage or HELOC allow renting? Check your loan documents
- Does your HOA limit rentals or lease terms?
- Will you self-manage or hire a manager?
- When does your 2-of-5-year window close?
- If you'll buy your next home with a new loan, how will the lender count this one? See sell before you buy?
“Many of my clients have a mortgage rate on their current home they don't want to give up, so renting it out is a fair question. I walk through the real monthly cost, the tax window and the landlord paperwork with them. Sometimes keeping it is a great long-term move. Sometimes the cleaner sale wins.”
— Elizabeth Vijan, Tackett Team, eXp Realty
FAQ: Selling vs. Renting in Arizona
Should I sell my house or rent it out?
Rent if the numbers and your appetite for landlording work; sell if you need equity or want to protect the exclusion.
Do I have to register a rental property in Arizona?
Yes, with the county assessor, under A.R.S. 33-1902.
Do I still pay rental sales tax in Scottsdale or Phoenix?
Not on long-term rentals since Jan. 1, 2025.
How much can an Arizona landlord charge for a security deposit?
Up to 1.5 months' rent.
Weighing a Sale Against a Rental?
I'll pull a pricing analysis for a sale and help you think through the rental side, so you can compare both options before you decide.
Elizabeth Vijan | Tackett Team, eXp Realty
Scottsdale & Phoenix Real Estate
Compare My Options · Call or text 602-885-7752
Sources: IRS Publication 523: Selling your home · A.R.S. 33-1902: Rental registration · A.R.S. 33-1321: Security deposits · Maricopa County Assessor: Rental registration · ADOR: Residential rental tax changes · Census QuickFacts: Scottsdale and Phoenix
Disclaimer: General information, not tax, legal or property management advice. Consult a tax professional and attorney before converting a home to a rental. Information deemed reliable but not guaranteed. Equal Housing Opportunity.
Tackett Team, eXp Realty · Get in touch