Tax Information

Fountain Hills Tax Rates

Tax rates for the Town of Fountain Hills are as follows:

• Fountain Hills - 2.9%
• State / County - 6.3%
  • Total combined tax rate - 9.2%
• Combined Contracting Tax Factor (for construction contractors) 65% of 9.2%
• Commercial Rent Rate 2.9%
• Commercial Rent Maricopa County 0.5%
• Commercial Rent Combined 3.4%
• Hotel / Motel Additional Tax Rate 4.0%
• Transient Lodging Rate - Maricopa County 7.27%

Use Tax

Fountain Hills taxes out-of-town purchases when the vendor has not collected the tax. This is commonly called Use Tax. The Business Code 029 is reserved for Use Tax. The rate for this tax is 2.9%.

Transient Lodging / Bed Tax

The Bed Tax applies to all persons who obtain lodging or the use of any lodging space for any period of less than 30 days - in addition to the regular tax of 2.9%. The activity is reported on a separate line of the tax form with the business code of 144 for all rental contracts.

Commercial / Residential Rentals

For lodging rentals less than 30 days, there is also a county tax of 7.27% that is in addition to the Fountain Hills Bed Tax of 4.0% and the Fountain Hills rate of 2.9%. If a home, condo or any other space is rented for periods less than 30 days (i.e., weekly) then the transient lodging tax applies for all periods even after 30 days. The total tax reported to the Department of Revenue is 14.17%.

For long-term residential rentals of 30 or more days, the only tax collected is for Fountain Hills at the rate of 1.6%.

The combined tax rate for commercial rentals is 3.4% (2.9% for the Town of Fountain Hills and 0.5% for Maricopa County). Please note to use both commercial lease codes (213 and 313).  See listing for more information.

Type	Fountain Hills TPT Rate	Fountain Hills Transient Rate	Maricopa County	Total Tax
Lodging (less than 30 days)	2.9%	4.0%	7.27%	14.17%
Residential Rentals (30 or more days)	1.6%	N/A	N/A	1.6%
Commercial Rentals	2.9%	N/A	.5%	3.4%

Other Tax Rates

• State Sales / Use Tax 5.6%
• County Transient Lodging Tax 7.27%

Computing Sales Tax on New Home Sales & Construction

• New construction only
• One-time tax
• Collected in stages as construction progresses

Lot Construction

Tax applies during lot construction under the following:

• Vacant land, not subdivided
• Subdivided into custom lots
• Construction begins on the subdivision, subcontractor hired for lot preparation (no home construction)
• Developer pays subcontractor for work performed each month
• Subcontractor pays to Arizona Department of Revenue all state, county and Fountain Hills sales tax when subcontractor receives payment from the developer (computed on the 65% rule)
• Subdivision is complete, all site preparation is complete, no homes yet constructed

Example

A 10-lot subdivision with total payments to the site preparation subcontractor from the developer in the amount of $500,000 is taxed as follows:

• $500,000 x .65 = $325,000 taxable $325,000 x .029 = $9,425
• Fountain Hills sales tax $500,000 / 10 = $50,000 site preparation cost per lot
• Lots sell for $100,000 each (sales tax has already been paid on $50,000) - Town is entitled to sales tax on the $50,000 profit for each lot
• For each lot in subdivision $50,000 x .65 = $32,500 x .029 = $942.50 due to Fountain Hills (collected at escrow from the seller of the lot)

New Construction on Taxed Lot

The sales tax that applies to new home construction built on a lot that has already been taxed is as follows:

• Contract signed between builder and owner
• Builder begins work on home
• Builder bills owner monthly for work performed ($60,000 x .65 = $39,000 x .029 = $1,131 Fountain Hills sales tax due)
• Builder makes monthly payments until home is completed

Home & Lot Sold Together

• The developer pays the contractor monthly for work performed.
• The contractor is responsible to pay sales tax to the Department of Revenue on these payments.
• The developer is responsible to pay sales tax at the close of escrow (i.e. when the seller receives payment). The developer may take a deduction for Sales Tax already paid.