Short-term rental taxes will rise in several Colorado communities following elections
- Nov 15, 2022 | Jennifer Sokolowsky
Several Colorado communities voted to increase lodging taxes on short-term rentals in the November 8 elections. Many of the communities that approved the tax hikes will use at least part of the extra revenue for affordable-housing initiatives.
The increases mean short-term rental guests will pay more for their stays — and short-term rental hosts will be collecting more tax to remit to local and state governments.
In Colorado, Airbnb and Vrbo collect state sales tax, state-administered county and city sales tax, and county lodging tax on behalf of Colorado hosts. However, short-term rental marketplaces may not collect all community-specific lodging taxes, and when this is the case, hosts are responsible for collecting these taxes and submitting them to the proper tax authorities. Even if a rental marketplace collects lodging taxes, hosts are still required to register for a state tax license and file regular lodging tax returns.
In Aspen, voters approved a ballot measure to increase lodging taxes on short-term rentals, up 5% for properties with lodge-exempt or owner-occupied permits, and 10% for hosts with second-home or investment properties. The city expects the new taxes to generate more than $9 million in revenue. At least 70% will be spent on affordable-housing projects, with the rest earmarked for infrastructure maintenance and environmental protection. The tax increase goes into effect on May 1, 2023.
An Aspen law went into effect on July 29, 2022, that creates new types of short-term rental permits, limits the number of days per year that properties can be rented to guests, and caps the number of short-term rental permits allowed in certain zones. Neither Airbnb nor Vrbo collect Aspen’s lodging taxes on short-term rentals, so hosts are solely responsible for compliance.
In Carbondale, voters approved a new 6% lodging tax on short-term rentals to support affordable-housing projects. The tax becomes effective January 1, 2023. Airbnb and Vrbo both collect Carbondale’s existing lodging taxes on behalf of hosts.
Dillon voters approved a measure to create a 5% tax on short-term rentals and increase its lodging tax from 2% to 6%, effective January 1, 2023. Together, these are expected to net around $4.5 million for the city, which will help fund projects including street and parking improvements, redeveloping the town center, and marina and workforce housing upgrades. Dillon’s current lodging tax is collected by Airbnb and Vrbo on behalf of short-term rental hosts.
In Steamboat Springs, voters approved an initiative that will levy a 9% tax on short-term rentals, effective January 1, 2023. The increase is expected to generate $11 million per year for the next 20 years, which will go toward affordable housing, including the city’s Brown Ranch development project, where 2,300 housing units will be built.
In early June, Steamboat Springs approved a new short-term rental law that includes licensing requirements and an overlay zone map.
Summit County voters passed a 2% short-term rental lodging tax, going into effect January 1, 2023. The new tax revenue will go toward affordable housing and childcare, among other projects.
Earlier this year, the county imposed a moratorium on new vacation rental permits. The nine-month pause went into effect May 24, 2022, and applies to new licenses for short-term rental properties in neighborhood zones.
Several other communities in Colorado increased lodging taxes for all types of accommodations, including hotels and short-term rentals. These include Dolores County, Eagle County, Estes Park, Georgetown, Gilpin County, Glenwood Springs, Julesburg, Littleton, Lyons, Nederland, and Palisade.
MyLodgeTax can automate and simplify short-term rental tax compliance, including registration and filing with state and local tax authorities. For more on short-term rental taxes in Colorado, see our Colorado vacation rental tax guide. If you have tax questions related to vacation rental properties, drop us a line and we’ll get back to you with answers.