Key points:

• Mohave County’s assessor has begun classifying short-term rentals as commercial properties

• The policy change will raise property taxes for short-term rental owners

• Some opponents say the assessor is acting unlawfully

After the Arizona Legislature refused to consider a bill last year that would have changed how short-term rental properties are classified, one county assessor decided to take matters into her own hands.

Mohave County Assessor Jeanne Kentch announced in July that her office started a policy about a year ago to reclassify the county’s short-term rental properties from residential to commercial, which will increase the assessment ratio for those properties from 10% to 15%.

“Regrettably, this will result in an increase in property taxes for properties that are primarily commercial in nature,” Kentch wrote in a county update that she distributed to the Arizona Capitol Times. “However, this policy creates fairness by ensuring that year-round short-term rentals are classified consistently with motels and hotels that have long been assessed under the commercial classification.”

In 2025, Kentch helped draft House Bill 2316 that proposed enacting a similar policy for the entire state. Rep. John Gillette, R-Kingman, sponsored the measure, but it was not considered in any legislative committee. In an interview with the Arizona Capitol Times, Kentch said the measure had the backing of the state’s county assessors.

“It just kept getting put in a drawer,” Kentch said of the bill. 

The Arizona Association of Counties published a platform last year calling for taxes on short-term rental properties, units which are rented for less than 30 days. Kentch’s policy applies only to short-term rentals rented for less than 30 days and are not the owners’ primary residences.

Kentch said she believes these rentals’ current classification creates an unfair playing field for motels and hotels, which pay higher taxes than short-term rental property owners. Over the past year, the Mohave County Assessor’s office has reclassified more than 900 short-term rentals from residential to commercial properties. While the policy has been in effect before Kentch’s July announcement, the county has more than 3,500 short–term rentals in it and Kentch said her office will continue its direction until all “full-time” short-term rentals are reclassified.

Many short-term rental owners do not support the policy change in Mohave County. They argue that it’s unfair to compare short-term rentals to hotels. 

“The vast majority of Arizona residents who share their homes do so to help make ends meet — no different than residents with other side hustles,” said Jonathan Wicks, president of Arizonans for Responsible Tourism. “Many are parents and grandparents using their personal property to cover rising costs. These are not big corporations and should not be treated as such.”

Kentch said she made the classification change using an Arizona Department of Revenue guideline stating that “real property in Arizona that is devoted to producing income for the owner is generally considered to be commercially used.”

The revenue department confirmed the guideline was part of its Residential Rental Property Classification Manual, which was published in 2004 before the advent of the short-term rental industry. A department spokeswoman said the agency is reviewing Mohave County’s new policy. 

Tom Farley, chairman of a political action committee that supports the short-term rental industry, the Responsible Tourism Coalition, said he believes a law passed by the Legislature in 2016, Senate Bill 1350, outlines that short-term rentals should not be classified as commercial properties. 

The law bans cities and towns from prohibiting the use of short-term rentals and defines “real and personal property” that is leased or rented to lodgers as a residential property.

“The assessor has to know this,” Farley said, noting that in 2025 she backed HB2316, which outlined short-term rental classification guidelines and laws. “She’s acting in direct contradiction to what has been on the books since 2016.”

Farley said the rise in property taxes for short-term rentals is additionally significant because it also raises the monthly payment property owners have with their escrow accounts to pay their mortgages. 

“Essentially, they’re not collecting enough from you, and your monthly payment will have to be readjusted,” Farley said. “So people are going to get a shock when they get a notice from their mortgage company that their monthly payment is going to go up because the Mohave County assessor decided not to follow state law.” 

Jon Riches, the Goldwater Institute’s vice president for litigation, told the Arizona Capitol Times he believes Kentch’s policy is “problematic” after conducting a legal analysis of existing laws.  

He pointed to an Arizona statute that defines residential property being leased or rented to lodgers as a residential use. 

“The use of the property is what matters,” Riches said. “What the assessor is doing is conflating an owner’s business activities with the property’s actual use.”

Even if a residential property is operating as a business, Riches said the use and range of activities still remains consistent with other houses. He also viewed hotels and motels in their own category for commercial use because those businesses have typical commercial uses such as bars, restaurants, retail spaces and event venues. 

Almost all short-term rental bills filed by state lawmakers since the 2016 law have died without committee hearings despite requests from municipal leaders and neighborhood groups to allow for more local control over short-term rental policy. 

Susan Edwards, president of the Arizona Neighborhood Alliance, said she hopes short-term rental laws will change statewide. She said neighbors of short-term rentals can also be affected by increased trash and sewage use that may arise from larger parties, while some property owners can reside outside the state and still pay residential taxes. 

“It’s a crime that is not implemented at the state level,” Edwards said. “Short-term rental owners, mostly out-of-state, are not paying their fair share.”

Kentch said she’s only received a handful of appeals to her reclassification of more than 900 short-term rental properties in the county. Riches said he believes property owners who have been affected by the change have standing to legally challenge the new policy.