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Higher Property Tax Rates on Short Term Rentals in Colorado?

More coin required for property taxes
Higher property tax rates on short term rentals in Colorado?

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.

Adjusted Property Tax Rate

The tax hike would change the tax rate of a residential property that is short term rented. Residential properties are currently taxed at 7% in Colorado. The proposal would increase the tax rate to the commercial property rate of 29%. For example, if you own a residential property worth about $318,000, you would pay about $1925 in taxes. That same property at a commercial tax rate would run you about $5000 a year in taxes. It’s a pretty substantial change.
Another angle they are considering is to only charge the higher tax rate for those that have more than one short term rental property.

Your Impact

What we would like from you is information about how the change would impact you, if at all.
– Would you sell your rental property?
– How would it impact your bottom line?
 – Would you long term rent your property instead? Those would not be subject to this higher tax rate
– Would you think twice about buying another short term rental property in Colorado?
– Would you adjust your nightly rates?
– Any additional information or comments about the change?

We’re Taking Action

We will pass all the info along to our local real estate board. Then they will compile all the data and pass it along to the Colorado Association of Realtors. The Realtor associations have some influence with the legislators and we want to put the voices of the short term rental owners in front of them before they decide to raise the property tax rates on short term rentals in Colorado.

Add Comments

Please enter comments below. We will share them and have our voices heard.

Posted in: All About Rentals, Homeowner Information Tagged: Legislation, Let's Talk, Property Taxes, STR

Comments

  1. Jennifer York says

    October 31, 2023 at 4:55 am

    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.

    Reply
    • Meredith Adams says

      October 31, 2023 at 2:15 pm

      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.

      Reply
  2. Kelly Tate says

    October 30, 2023 at 4:33 pm

    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.

    Reply
  3. Kathleen Baccarini says

    October 30, 2023 at 2:27 pm

    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.

    Reply
    • Meredith Adams says

      October 30, 2023 at 2:35 pm

      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!

      Reply
  4. Sharon Strickler says

    October 27, 2023 at 8:20 pm

    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!!!

    Reply
    • Meredith Adams says

      October 27, 2023 at 9:27 pm

      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.

      Reply
  5. Kelly Tate says

    May 9, 2023 at 11:17 am

    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).

    Reply
    • Meredith Adams says

      May 9, 2023 at 11:32 am

      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.

      Reply
  6. BT says

    October 9, 2020 at 11:41 am

    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.

    Reply
    • Meredith Adams says

      October 9, 2020 at 12:17 pm

      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.

      Reply
  7. James Albritton says

    May 25, 2020 at 4:48 pm

    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.”

    Reply

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Mountain Living Real Estate, a.k.a. The Mountain Living Team, is a family owned, second generation, real estate company that has been helping buyers and sellers in Summit County since the early 90’s.  Mountain Living Real Estate is committed to going above and beyond to ensure their clients have the most amazing real estate experience possible.  Jason & Meredith take a personal approach to educate their clients, empowering them to make high quality decisions no matter the situation.  They take exceptional care throughout the sales process and beyond; striving to make each client’s path in Summit County one filled with fun, excitement & great memories.

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Jason and Meredith Adams

Jason & Meredith Adams
Mountain Living Real Estate

101 Main St, #109, PO Box 4115 Frisco, CO 80443

(888) 666-0844
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Jason & Meredith Adams are both licensed to sell real estate in the state of Colorado

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