Can I rent out my casita or ADU in Scottsdale, Arizona?

State law is on your side. Under A.R.S. 9-461.18, Arizona requires larger cities, including Scottsdale, to allow you to use a casita or accessory dwelling unit (ADU) as a long-term rental on your single-family lot, and the city cannot block that use. If you want to rent it short term, under 30 days at a time, that is legal too under separate state law, but Scottsdale requires a city license first. The one catch is private rules. If your property is in an HOA, the recorded CC&Rs (the covenants, conditions, and restrictions that govern the neighborhood) can still limit or ban rentals, because state law does not erase private agreements.

What state law guarantees for long-term rentals

State law gives you a protected right to rent your casita or ADU long term, and Scottsdale must honor it. A.R.S. 9-461.18 was created to make ADUs easier across Arizona. The statute applies to any "municipality with a population of more than seventy-five thousand persons," which includes Scottsdale, Phoenix, Mesa, Chandler, and the other large metro cities. For those cities, the law requires them to allow at least one ADU on a single-family residential lot.

The rental protection is the part that matters here. The statute bars a city from blocking the use of "either the single-family dwelling or any accessory dwelling unit located on the same lot or parcel as separately leased long-term rental housing." In plain terms, Scottsdale cannot tell you that you may build a casita but may not lease it to a tenant on a long-term basis. You can live in the main house and rent the casita, or rent both, as separate long-term housing.

That makes a casita or ADU one of the cleanest ways to add rental income to a Scottsdale property. A long-term rental generally means a lease of 30 days or more. This is the category state law most strongly protects, and it carries the lightest local regulation. For a full picture of the rules behind these units, see Arizona ADU requirements and which Arizona cities are required to allow ADUs.

Short-term rentals follow a different set of rules

Short-term rentals are legal in Scottsdale, but they run under a separate law and require a city license. A short-term rental is a stay under 30 days, the kind you list on a vacation-rental platform. Arizona handles these under A.R.S. 9-500.39, which states that "a city or town may not prohibit vacation rentals or short-term rentals." So Scottsdale cannot ban them outright.

What Scottsdale can do is license and regulate them for health and safety. The same statute lets a city require an owner to "obtain and maintain a local regulatory permit or license," with a fee "not to exceed the actual cost of issuing the permit or license or $250, whichever is less." Scottsdale uses that authority. The city's official guidance is direct: "All properties offered for rent less than 30 days require a Scottsdale license." You apply through the city, provide an emergency contact, and carry the required liability insurance before you list the property.

Scottsdale also restricts how a short-term rental can be used. The city limits these properties to residential use and prohibits running them as event venues for "weddings, corporate events, large parties and other commercial gatherings." Break the rules and the city can issue escalating fines. The takeaway is simple. A short-term casita rental is allowed, but it comes with a license, insurance, an emergency contact, and use limits that a long-term lease does not.

Taxes are the other short-term difference. A stay under 30 days is taxed as transient lodging, so a short-term host has to get a transaction privilege tax (TPT) license from the Arizona Department of Revenue and collect and remit state, county, and city tax on each booking. A long-term lease of 30 days or more is treated as residential rent, not lodging, and does not carry that nightly tax. So the short-term path adds a tax account and monthly filing on top of the city license, while a long-term casita tenant keeps your paperwork simple.

Long-term versus short-term: which path fits your casita

The choice between long-term and short-term renting comes down to regulation, income, and effort. A long-term lease carries the strongest legal protection and the lightest paperwork. A short-term rental can earn more per night in a tourist market like Scottsdale, but it adds a license, insurance, taxes, and active management. Here is how they compare.

• Long-term rental (30 days or more): Protected by A.R.S. 9-461.18. No special city rental license for the ADU use itself. Steady income, one tenant, low turnover. The simplest path.
• Short-term rental (under 30 days): Allowed under A.R.S. 9-500.39, but Scottsdale requires a license, an emergency contact, and liability insurance. Higher potential income, more rules, more work, and transaction privilege tax to collect and remit.
• Mid-term (30 to 90 days): Usually treated as long-term since it clears the 30-day line. Popular with traveling professionals and snowbirds.

Money is not the only factor. A long-term tenant in a casita is quiet and predictable. A short-term operation means cleaning, guest turnover, and neighbor relations. Many Scottsdale owners start with a long-term lease for the simplicity and protection, then weigh short-term only if the numbers clearly justify the added load. If you are still deciding what kind of unit to build, casita versus guest house versus ADU explains how the labels affect what you can do.

The HOA is the rule that can still stop you

The one thing that can override your state-law rental rights is your HOA, so check the CC&Rs before you count on rental income. State law makes a point of leaving private agreements alone. A.R.S. 9-461.18 says it "does not prohibit restrictive covenants concerning accessory dwelling units entered into between private parties." That means the city must allow your ADU and its long-term rental, but your HOA's recorded covenants can still restrict it.

In practice, many Scottsdale HOAs limit rentals. Common CC&R rules include a minimum lease term, often six months or a year, a cap on the number of homes that can be rented at once, a ban on short-term or vacation rentals, or a requirement to register a tenant with the association. These are enforceable private contracts. The city cannot waive them for you, and a buyer who skips reading them can be caught off guard.

Before you build a casita to rent, or buy a home planning to, do two things. First, pull and read the full CC&Rs, not just the summary, and look specifically for rental and leasing rules. Second, confirm with the HOA whether short-term rentals are allowed at all, since many ban stays under 30 days even though the city permits them. For the deeper interaction between city ADU mandates and HOA authority, see can my HOA block an ADU if the city allows it in Arizona. Rental rules are high-stakes money decisions, so confirm both the Scottsdale license requirements and your HOA's current covenants before you sign a lease or list the unit.

The Jematell Homes approach

We design to your lot's zoning envelope from the first sketch. Every project is different, so we will confirm the specifics for your parcel and budget with you directly.

Sources

• A.R.S. 9-461.18 (Accessory dwelling units; municipalities; long-term rental)
• A.R.S. 9-500.39 (Limits on regulation of vacation and short-term rentals)
• City of Scottsdale: Vacation and Short-Term Rentals