
The state of Colorado has some proposals in the works that would raise the property tax rates on short term rentals. We have been hearing rumors of this happening since late last year. It sounds like now they are working on something to make it a reality. We need both facts and opinions about the change from as many short term rental owners in Colorado as possible.
We currently pay a property tax, county tax and a lodging fee. If this was to go into effect we would sell. Sadly I foresee property values for STR decreasing as well.
Colorado state and the local businesses take in a lot of income from tourism . If STR prices are raised to absorb the hike more ppl will go to Utah or other areas to ski, and or not frequent local establishments due to budget constraints. Local businesses will suffer.
I see this proposal as another way to shut down the little mom and pop businesses.
I don’t know if shutting down the mom & pop businesses is the intent but it is sure sounding like it could wind up being a very real result.
We’d have to sell and likely at a substantial loss. We wouldn’t be able to pay our mortgage on our dream home we built for our future retirement. We took money out of retirement to fund the dream and we’d lose that and our future. We have one property.
If this tax increase happens I will be forced to sell my STR, as it is it requires alot of work and effort to run and maintain my STR, it is not feasible to do long term rentals in Grand county where I am located and make enough return to contribute to our retirement cash flow, so we would sell and invest elsewhere. There are already license fee increases next year, Insurance increases, this would be the last straw . I see this as disaffecting the single STR owners way more significantly the big corporate owners of STR.
I agree. All these cost increases are killing the mom & pop operations. I think a No vote on HH will help keep this from happening as that is where they are currently trying to add the new property taxing categories. I expect it will reappear in other bills so we need to be watching them!
I am an owner of 1 property. I am retired and depend on my STR income to make my mortgage.
If taxes were increased to 29% I would have to consider selling my home, or raising my rates. If I raised my rates it may reduce the number of stays I could book and result in the same situation of having to sell my home. I rent generally to families who can’t afford local resort fees, yet want to enjoy a mountain experience.
At this point in my life I need more time to plan for such a significant change. This change, at the same time Social Security benefits may be cut back is too much!!!
I don’t believe the structure is in place yet for the tax rate on short term rentals to change. However, Proposition HH on the November ballot has the new classification of non-primary residential which is the infrastructure needed for the state to have a different tax rate for rentals. At this point, if your rental is a room or lock off in your primary residence, I don’t think your tax rate would increase. Of course, you never know what the government will propose, but I don’t expect someone’s primary residence to be subject to this type of potential property tax rate change.
Thanks for posing this. Curious where the issue stands now? We are vacant land owners getting ready to build our dream home (future retirement home). Given the costs and high interest rates, we’d have to rent out occasionally to make the mortgage payment. The change to “commercial” status would cause us to 1) increase our rates and 2) potentially sell the property rather than using it as a vacation/retirement home. They already charge license fees and personal property tax on things like beds and appliances (crazy).
Nothing further has happened with this yet. I still see this as a possibility in the future. Our new property tax assessments just came out. The steep increase has made lawmakers strategize about how to keep the tax bills more manageable. I haven’t heard talk about this change being a solution but it wouldn’t surprise me if it comes up as a way to have the second homeowners pay the higher tax bills so the lower income homeowners can have their property taxes lowered. I think there would still be steep opposition to this type of change.
Many areas have implemented short term rental caps where no more licenses are even available. Because you haven’t built yet, you have some time for this change to be somewhat normalized, however, you should know what the short term rental rules are wherever your property is located.
Keep in mind for both of these concerns, a short term rental is typically less than 30 days. If you rent for a minimum of 30 days at a time, neither of these would apply to you.
Realtors thrive on the ever inflating value of real estate, even at the cost of what was once a tight-knit community. Speculative investing and second/third/etc-homeownership has permanently transformed mountain towns all over Colorado. The real estate lobby is too strong and too money thirsty to even consider regulating this change. Sad.
I think it’s the state government feeling left out of the short term rental profits homeowners are making. They want a piece of the pie and changing the tax rate gives them a slice. It’s up to homeowner’s through their local real estate agents to use the real estate lobby to give the opinions of homeowners to the government officials that make the decisions. If no action is taken, the government will do what they want. At least if opinions are passed along, there is a chance they will be heard.
Jason & Meredith, I see this has currently been postponed, however offer feedback for future considerations. Although we are currently not a short term rental property owner, the new tax rates would cause us not to further invest in Summit County. Hotels are not the same as individual residences. They are commercial properties with corporate infrastructures. In summary;
How would higher taxes impact you:
– Would you sell your rental property? “Yes”
– How would it impact your bottom line? “Significant impact, rental rates would be non-competetive, cost prohibitive to invest in Summit County.“
– Would you long term rent your property instead? Those would not be subject to this higher tax rate. “No we would sell property and invest elsewhere. We currently long term rent our properties, already the State of Colorado has imposed a new tax on improvements, benefits of appliances installed.”
– Would you think twice about buying another short term rental property in Colorado? “Yes, would not buy in Colorado”
– Would you adjust your nightly rates? “Yes, increase rates until property sold and pull investments out of Colorado”
– Any additional information or comments about the change? “Would pull out of all current investments and relocate assets.”