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Property taxes would more than triple for Colorado short-term rental owners under proposal

Someone posted about a similar bill back in 2018. Resorts are having a real problem finding staff when they can’t afford to live nearby.

The draft bill comes amid broader conversations around short-term rentals in western Colorado. Town councils and county commissioners see limits and increased fees on properties rented through sites like Airbnb and VRBO as a way to ease a critical lack of affordable housing that is triggering a labor shortage.

In mountain communities, many think short-term rentals have already spiraled out of control. Many of them are cracking down on short-term rentals as new residents buy homes for record prices and more owners convert long-term rentals for local workers into vacation homes offered to travelers.

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My area taxes everything having to do with tourism & STR. I’m guessing, your area’s proposed property tax will eventually translate into an additional rental revenue tax because it is easier to calculate.

In my area:
There is a 3-tier property tax system:
Primary residence-owner>age 65 lowest
primary residence-middle
2nd home or Rental - highest

+Then there’s a 14% hospitality tax on each rental $ of revenue
+Plus extra $60 per week trash pick up for weekend pickup from rentals
(M-F trash pick up is part of property tax but Sat-Sat rentals were over filling bins & causing messy litter so now must pay for weekend pick up too)

The 14% STR tax is more than my property tax so I’m almost at the tax rates predicted in your article.

It’s interesting local governments tax tourism based businesses saying they are trying to make the area less appealing for STR use of housing so more LTR available BUT if they lose the tourism tax $$, it will shift to higher taxes for residents—classic catch-22

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I don’t live in Colorado, so it won’t apply to me. I posted it because it may indicate a trend, and for hosts here that live in CO.

Alaska’s only state property taxes are on oil and mineral reserves. Real estate taxes are reserved for local governments (cities and boroughs, which are like counties). For property tax, our taxable value by state law must be the full assessed value. The current property tax rate is 13 mills, or 1.3%, from the basic tax + fire/police/water/sewer service areas where I’m located.

Because I’m over 65, the city gives me a $150,000 senior tax exemption on my half of the house as long as it’s my primary residence. Seniors with an extremely low income may petition for a lien to defer part of the taxes that become due when the homeowner dies or the property is sold or transferred.

Real property sellers were not required to report sale values until the law changed a year ago, so a number of neighbors were shocked when their assessments went up this year because of increases in value. I had a pretty good idea of what mine would bring and that it would sell before it gets listed, because this is a very desirable area. The values have gone up 125% since I bought 15 years ago.

We also have a local 5% sales tax, except that seniors get an exemption on groceries (the tax exempt card is also a free city bus pass). And there is an additional 9% local bed tax to support the tourist bureau, so my guests pay 14%. Remember that those taxes I collect for the city are not on me, they are on my guests.

This bill scares the bejesus out of me, as I live in western Colorado! I have closely watched the local resort towns try to balance the affordable housing shortage, vs the huge rise in STRs, & honestly, I wish I had an answer that could benefit all.
I do not live in a resort town- this is mostly an agricultural area, but within a cpl of hours to 3 resort towns. All of western Colorado is seeing incredible property value increases, as is most of the country. However, I obviously don’t want to be termed a commercial property, for various reasons! In short, I’ll be talking to my tax advisor next week. Yikes!!! :dizzy_face:

Paying staff more is obviously not an option, is it? After all, if staff had a wage that allowed them to live locally the staffing issue (or at least that issue) would be a NON issue.

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