Rental of Personal Property
You owe tax on rentals of personal property if:
You are in the business of renting or leasing personal property to others.
Example of taxable rental items include:
- office equipment
- construction equipment
- data processing equipment
- restaurant equipment
- video tapes, computer software, etc.
- cars, trucks, trailers, boats, planes, etc
- Clothing or costumes
Tax rate and procedures
The tax rate is 1.75% on all rental income. Income is any value received
either as funds or bartered services or merchandise. (Note: The Mesa
City Tax rate increased to 1.75% effective 07/01/2006)
Collection of tax
You may choose to charge the tax separately on each sale, or include
transaction privilege tax in your price. If you over charge any tax to your
customers, you must remit the excess tax to the city.
If you include tax in your price, you can use
"back into" the tax included in your gross sales.
- Buying items to rent to others
If you are in the rental business, you do not owe retail transaction
privilege tax on items you buy to rent to others. These sales are considered
sales for resale and are exempt.
- Charges added to rent
Charges for items such as insurance, fuel, mileage, collision damage waiver
and maintenance are taxable as part of your rental income. This is true even
though the charges may be billed separately from the rental charge.
- Rent for re-rent
If you rent items to someone who re-rents the items, you aren't taxable on
your rental income. To claim this exemption, the lessor must obtain a
properly completed resale certificate from the lessee. Rental of items such
as bedding and linens to hotels/motels is not considered rent for re-rent.
- Renting to contractors or non-profit organizations
Rentals of equipment to contractors or most nonprofit organizations (except
qualifying hospitals, community health centers or health care organizations)
are subject to tax.
The rental income from leasing an item that has a purchase option is taxed
under personal property rentals until the item is purchased. Income from the
eventual sale is taxed as a retail sale.
- Mobile Equipment
Equipment that is leased and is not permanently or semi-permanently
installed in one location is taxed at the location of the leasing company.
- Motor Vehicle
Motor Vehicles leased for a minimum of twenty-four (24) months are taxed at
the location of the dealership rather than the location of the lessor.
- Items rented to a qualifying hospital, a community health center, or a
health care organization.
- The rental of a prosthetic.ce prescribed or recommended by a physician,
dentist, or medical professional.
- Rental of films, tapes, and slides by theaters, television stations, and
radio stations. This does not include the rental of videotapes to
individuals for their own use.
- Rental of certain machinery, equipment, and related items used directly in
manufacturing, processing, mining, by telephone companies, for electric
power production, and transmission pipelines, airlines, railroads, and by
the oil and gas industries.
- Rental to nonresidents of Arizona for use outside the state if you ship or
deliver the item out of state.
- Items semi-permanently or permanently installed within another city or town
that levies an equivalent tax on the transaction.
- Separately billed charges for delivery, installation, repair, and/or
- Income from the operation for car washes, and coin-operated washing and
- Rental, leasing, or licensing of aircraft that would qualify as aircraft
acquired for use outside the State, if such rental, leasing, or licensing
had been a sales and further provided that required documentation is