America's Property Tax Advisor

Colorado Considers Commercial Classification for Short-term Rentals


Proposed legislation could change the property classification of short-term rentals in Colorado from residential to commercial.


The change would change the assessment ratio for short term rentals from 7.15% to 29% across the state. This would have the effect of quadrupling property taxes on those assets.


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Senate Bill 20-109, sponsored by Senator Bob Gardner defines short-term rental property as a building that is used predominantly as a place of residency by a person, family, or families, but is leased for short-term stays.


For the purposes of this proposed law, a property qualifies as a short-term rental unit only if it is occupied by the owner for less than 30 days per year. Therefore, if a family has a second home and stays there for at least a month’s time over the course of a year, they can still rent their home out for the rest of the year without being subject to commercial property taxes.




Breckenridge Town Council member Gary Gallagher told the Summit Daily News that the council generally supports a bill like this that applies to short-term rental properties, which are being run like a business, rather than families who just want to rent out their property a few times a year.


Gallagher said a short-term rental that is being operated as a business should not get special tax benefits compared to restaurants, hotels, or other commercial properties.


“Let’s call it what it is: it’s a business,” Gallagher said. “We tax other businesses as commercial properties.”




Summit Association of Realtors President Dana Cottrell said the change would negatively impact investors in the community if suddenly, they must pay higher taxes.


“People want to offset their costs,” Cottrell said, “I want to protect the people who want to have a second home and want to offset those costs. I want them to use their properties as they see fit.”


Mary Waldman, owner of Summit Mountain Resorts, also opposes the bill.


“For those of us who live in the mountain community, it will be a collapse in real estate prices because the people who live here are heavily dependent on tourism for our sales tax dollars," she said. Waldman added, “We feel it’s a very short-sighted effort to try and collect some more taxes.”