Taxation of Residential Vacation Rental Property

There is a lot of conversation at the Colorado State level surrounding taxation of vacation rentals. As of right now, three bills may be presented.

First, HB22-1117 has been presented as an opportunity for county governments to introduce lodging taxes at a county level. These taxes would be dedicated to tourism marketing and workforce housing.

Next, a bill from Senator Hansen surrounding commercial taxation for vacation rentals is currently in committee for review and editing. It is unclear whether or not this bill will actually go anywhere. However, it continues to be a hot point of discussion. The first version of this bill recommended taxing vacation rental properties as commercial entities, which would mean a 29% property tax bill. Additional discussions have offered a sort of in-between tax rate for vacation rentals in the neighborhood of 20- 22%.

A third bill being presented would potentially impact the way vacation rentals are classified as residential vs. commercial real estate. This bill is being presented by the Colorado Association of Realtors in partnership with legislators. Again, this bill is also in draft form. It is unclear what will happen next.