Short-Term Rentals in Tempe, AZ: What Residents Actually Need to Know

If you live in Tempe or are thinking about moving there, short-term rentals are one of those things you probably won't think about until they affect you directly. Tempe has 8 specific rules on the books covering different aspects of short-term rentals, and some of them might surprise you.

Registration Rules

Tempe Ordinance O2023.01 (City Code Ch. 16A, Art. X) requires every short-term/vacation rental owner to hold a City of Tempe Short-Term Rental License before listing. $250 annual fee ($187.50 if issued after July 1), $500,000 liability insurance, Arizona TPT license, 24/7 emergency contact, neighbor notice and Maricopa County rental registration are mandatory.

Key details: Code Reference: Tempe CC Ch. 16A, Art. X. Ordinance: O2023.01. Annual Fee: $250 ($187.50 after July 1). Insurance: $500,000 minimum. Decision Window: 7 business days.

Operating without a current city STR license, lapsed insurance, or failure to send neighbor notice can result in license suspension for up to 12 months and code-enforcement civil penalties under Ord. O2023.01. Failure to register the rental with Maricopa County triggers a separate $1,000 fine under A.R.S. § 33-1902.

This is not one of those rules that cities tend to ignore. Tempe actively enforces its registration rules requirements.

Night Caps

Tempe imposes NO annual or per-stay night cap on short-term rentals. Arizona Revised Statutes § 9-500.39 (SB 1350, expanded by SB 1168) preempts cities from prohibiting STRs or capping the total number of dwelling units used as vacation rentals. Stays under 30 consecutive days are taxed at the combined ~14.07% rate (6.80% city + 7.27% state/county).

Key details: Annual Night Cap: None (state-preempted). State Statute: A.R.S. § 9-500.39. STR Threshold: <30 consecutive days. Combined Tax: ~14.07% (6.80% city). Permit Required: Yes (Ch. 16A Art. X).

Because no Tempe night cap exists, there is no per-night-cap citation. Operating without the Article X license, however, can trigger license suspension for up to 12 months plus code-enforcement civil penalties, regardless of how many nights the property was rented.

Tempe is more permissive than most cities when it comes to night caps. That said, there are still limits.

Parking Rules

STR guests in Tempe must park only in driveways or designated parking areas. Vehicles cannot be parked on landscaped areas. Operators must inform guests of parking rules and ensure sufficient off-street parking is available.

Key details: Parking Requirement: Driveway or approved surface only. Landscaping Rule: No parking on landscaped areas. Operator Duty: Must communicate rules to guests. Street Parking: Subject to posted restrictions.

Vehicles parked on landscaping or in violation of street parking rules may be ticketed or towed. Repeated parking complaints at an STR may lead to enforcement action against the operator's registration.

Permit Requirements

Tempe requires short-term rental operators to register with the city and hold an Arizona Transaction Privilege Tax (TPT) license. Under Arizona state law, cities cannot ban STRs in residential areas but can regulate safety and nuisance aspects. Registration allows the city to contact owners in emergencies.

Key details: Code Section: Tempe City Code Ch. 16A, Art. X. State Law: AZ SB 1350 preempts outright bans. Requirements: City registration + TPT license. Local Contact: Must be designated and available. Safety: Must meet fire/building/health codes.

Operating without registration or a TPT license may result in fines. The city can issue civil penalties for violations of noise, parking, or safety requirements associated with the rental. Repeated violations may lead to suspension of the rental registration.

Noise Rules

Short-term rental guests in Tempe must comply with the city's noise ordinance (Chapter 20). STR operators are responsible for informing guests about quiet hours and noise restrictions. The city can revoke STR registration for repeated noise violations.

Key details: Quiet Hours: 10 PM–6 AM. Standard: Audible at 50 feet. Operator Duty: Must inform guests of rules. Enforcement: Violations tracked by property.

Noise violations by STR guests are attributed to the property and operator. Repeated complaints may result in fines, mandatory noise mitigation measures, or suspension of STR registration.

Taxes & Fees

Tempe STR operators must collect and remit Arizona Transaction Privilege Tax (TPT) and local taxes on rental income. The combined tax rate includes state, county, and city components. Operators must hold a valid TPT license from the Arizona Department of Revenue.

Key details: Tax Type: Arizona Transaction Privilege Tax (TPT). Components: State + county + city taxes. License Required: AZ DOR TPT license. Filing: Monthly or quarterly.

Failure to collect and remit taxes may result in penalties, interest, and back-tax assessments from the Arizona Department of Revenue. The city may also revoke STR registration for non-compliance.

Compared to other cities, Tempe takes a harder line on taxes & fees. The enforcement and penalty structure reflects that.

Insurance Requirements

Tempe's STR license ordinance (O2023.01) and Arizona law (ARS 9-500.39) establish the framework for STR insurance. Operators should carry liability insurance as standard homeowner's policies may exclude STR activity. STR platforms provide some host protection, but personal coverage is recommended. The annual $250 license fee helps fund enforcement.

Key details: License: Tempe STR license required ($250/year). License Penalty: Up to $1,000/month without license. Homeowner's Policy: May exclude STR activity. Platform Insurance: Limited host protection available. TPT Rate: 14.07% combined.

Operating without a Tempe STR license carries penalties up to $1,000/month. Operating without proper insurance creates personal liability exposure.

Occupancy Limits

Tempe's STR licensing ordinance (O2023.01) requires compliance with residential use standards. Arizona preemption (ARS 9-500.39) limits city-specific occupancy caps. STR properties must comply with general noise, parking, and nuisance ordinances. STRs cannot be used as party houses or event venues. Neighbor notification is required when obtaining an STR license.

Key details: State Preemption: ARS 9-500.39 limits city-specific caps. Neighbor Notification: Required when obtaining STR license. License: $250/year, penalties up to $1,000/month without. Event Venues: Prohibited use for STR properties. Suspension: 3 verified violations in 12 months.

Repeat violations may result in STR license suspension for up to 12 months. Standard nuisance violations also apply.

The Bottom Line

Tempe is tougher than many cities when it comes to short-term rentals. Out of the 8 rules covered here, 2 are rated strict. If you are a homeowner, renter, or business owner in Tempe, take the time to understand these requirements before they become a problem. Most violations come with fines, and some repeat violations can escalate.

This guide is based on Tempe's current municipal code. Local rules can and do change, so check the individual ordinance pages for the latest details, penalties, and FAQs.