City of Scottsdale Short-Term Rentals: Licensing, Notices, Taxes

A Scottsdale short-term rental license costs $250 per year per property and is required for any dwelling rented for fewer than 30 consecutive days. You apply through the city’s online portal after first obtaining a state Transaction Privilege Tax (TPT) license, and you must carry at least $500,000 in liability insurance, notify your neighbors, register with Maricopa County, and post an interior safety notice before you can legally take bookings.¹

Scottsdale cannot refuse your application, but it does enforce the conditions aggressively. Violations can reach $3,500 per incident or three nights’ advertised rent, whichever is greater, and three verified violations in a year can suspend your license for up to twelve months.²

The Five Steps to Get Licensed

Step 1: Get Your Arizona TPT License

Before you touch the Scottsdale application, apply for a Transaction Privilege Tax license through the Arizona Department of Revenue. The fastest route is AZTaxes.gov, which issues the license number the same day. A paper JT-1 form by mail takes about two weeks, and in-person applications at an ADOR office are same-day.³

You will need a federal Employer Identification Number to complete the application. Sole proprietors with no employees can use their Social Security number instead, but single-member LLCs have to get an EIN from the IRS.³ Keep the TPT number ready; the Scottsdale application asks for it.

Step 2: Apply to the City

With TPT in hand, apply through Scottsdale’s online portal. You create an account, upload your insurance certificate and TPT information, and pay the $250 annual fee. Each property needs its own separate license. Rentals of 30 days or longer are not subject to this requirement.¹

Step 3: Notify Neighbors Within 30 Days

Within 30 days of receiving your city license, send a notification letter to all single-family residential properties adjacent to yours, directly across the street, and diagonally across the street. If your rental sits inside a multi-family building, notify every unit on your floor instead.⁴

Step 4: Register with Maricopa County

Arizona law (ARS 33-1902) makes it illegal to rent a property before registering it with the Maricopa County Assessor. This is separate from the city license and ensures the property is classified correctly for tax purposes.¹

Step 5: Post the Required Interior Notice

Scottsdale City Code Section 18-175(h) requires a laminated notice displayed on the inside of the front door and the primary door leading to the backyard, or in a conspicuous location near each. The notice must be printed in 14-point or larger bold font and must include the location of fire extinguishers and other life safety equipment along with the city’s waste disposal rules.¹

What the Neighbor Notification Letter Must Contain

The letter is where many owners trip up. It must include your Scottsdale short-term rental license number, the physical address of the property, and the name, address, and 24-hour telephone number of your designated emergency point of contact.⁴

“Adjacent” under Scottsdale’s rules means properties near or close to yours, even if separated only by a street or alley. You can deliver the letter by hand, by U.S. mail, or electronically. After delivery, you file the city’s Neighbor Notification and Liability Insurance Compliance Attestation form listing each address you notified and the method used.⁴

If your emergency contact changes later, you must send updated letters to the same neighbors and re-attest compliance.

Liability Insurance

Every Scottsdale short-term rental must carry at least $500,000 in aggregate liability coverage. There is one alternative: if you list exclusively through an online lodging marketplace like Airbnb or Vrbo that provides equal or greater coverage, the platform’s policy satisfies the requirement.⁵ Verify the platform’s specific terms, because marketplace policies often have significant exclusions.

Standard homeowners insurance typically excludes claims arising from business activity on the property. If a guest is injured and your insurer discovers you were running a rental, the claim can be denied. A dedicated short-term rental policy or a commercial liability endorsement gives you coverage you control instead of coverage tied to a booking channel.

Occupancy and Operational Rules

Occupancy is capped at six adults plus their related dependent children per dwelling unit. If your property has a guest house, you must rent the main dwelling and guest house together as a single unit; renting them separately is not allowed.¹

Commercial uses are prohibited. No retail, no restaurant operations, no banquet or event hosting. Nuisance parties and unlawful gatherings are banned, defined by the city as social activities causing substantial neighborhood disturbance including excessive noise, heavy traffic, public drunkenness, and litter.¹ On-street guest parking follows the ordinary neighborhood rules unless an HOA or other private restriction says otherwise.

If you take direct bookings outside a platform, you remain responsible for screening guests against sex offender registries. When a guest books through a marketplace that already runs that check, the city must waive the obligation.⁵

Pool Barrier Requirements

Most Scottsdale rentals have pools, and Arizona sets specific barrier rules that apply whether or not the property is rented. Any pool or contained body of water at least 18 inches deep and wider than eight feet must be enclosed by a barrier at least five feet tall on the exterior side. Gates must be self-closing and self-latching, with the latch at least 54 inches above ground level or placed on the pool side with a release mechanism at least five inches below the top of the gate. Gates must open outward, away from the pool, and the barrier cannot have handholds or footholds usable for climbing.⁶

If a house wall forms part of the pool enclosure, you need one of the following: an additional barrier between the home and the pool area at least four feet tall, a motorized safety pool cover operated by key switch, or self-latching devices on all ground-level doors with direct pool access.⁶ With guests who do not know the property, this is one of the highest-liability items on the list.

Taxes You Collect and Remit

Short-term rental revenue in Scottsdale carries multiple layers of tax. The city imposes a 1.75% Transaction Privilege Tax on lodging, a 5% hotel/motel additional tax, and an additional 3% transient bed tax, all on top of the state TPT rate.⁷

When filing your TPT return, use Scottsdale’s assigned city code so the revenue routes to the right jurisdiction.⁸ Some booking platforms collect and remit these taxes automatically, but you are still responsible for confirming that every applicable tax is being paid.

Penalties and License Suspension

Arizona’s penalty structure escalates based on verified violations at the same property within a rolling 12-month window:²

First violation: up to $500, or one night’s advertised rent, whichever is greater.
Second violation: up to $1,000, or two nights’ rent, whichever is greater.
Third and subsequent violations: up to $3,500, or three nights’ rent, whichever is greater.

The “whichever is greater” language means high-end Scottsdale properties charging $800 or more per night face penalties well above the flat dollar amounts. Multiple violations arising from the same incident count as one for penalty purposes.

Three verified violations within 12 months can trigger suspension of up to 12 months. Aesthetic, waste disposal, and parking violations alone do not count toward that threshold unless they also pose a serious health or safety threat. A single serious incident can trigger suspension on its own, including a felony committed at the property by the owner or their designee, a serious injury or death caused by the owner’s knowing or reckless conduct, or knowingly allowing an unpermitted special event.⁹

Separately, failing to keep emergency contact information current with the city carries a civil penalty of up to $1,000 for every 30 days the information remains missing, after the city provides 30 days’ written notice.⁵

Two Things Your City License Does Not Fix

A Scottsdale license does not override your HOA. If your CC&Rs restricted short-term rentals before you bought the property, the HOA can enforce those restrictions regardless of what the city or state allows. Arizona law does prevent HOAs from adding new short-term rental bans after the fact without a homeowner vote to amend the CC&Rs. Read your governing documents before you spend money on licensing and insurance, because an HOA ban on rentals under 30 days makes the city license useless.

A city license also does not change your federal tax obligations. One narrow exception matters at tax time: if you use the property as your personal residence and rent it out for fewer than 15 days in the tax year, you do not report the rental income and cannot deduct rental expenses. This is sometimes called the 14-day rule or Masters Rule.¹⁰ For everything above that threshold, standard rental income reporting applies.

1
City of Scottsdale. Vacation and Short Term Rentals
2
Arizona Legislature. Arizona Legislature HB2556
3
Arizona Department of Revenue. Applying for a TPT License
4
City of Scottsdale. Neighbor Notification and Liability Insurance Compliance Attestation
5
Arizona Legislature. Arizona Revised Statutes 9-500.39
6
Arizona Legislature. Arizona Revised Statutes 36-1681 – Pool Enclosures Requirements Exceptions
7
Arizona Department of Revenue. Scottsdale Transaction Privilege Tax and Use Tax Rates
8
Arizona Department of Revenue. TPT License
9
Arizona Legislature. Arizona Legislature HB2308
10
Internal Revenue Service. Renting Residential and Vacation Property