Colorado: Sales Tax Always Due on Taxable Rentals
- Jul 23, 2013 | Gail Cole
Update, 10.1.2014: With ski season fast approaching, the Colorado Department of Revenue is reminding taxpayers that sales tax is due on the rental of short-term lodging. See below for details.
Colorado Department of Revenue reminds that both state and local sales tax are "always due on taxable rentals."
Property management companies
Property management companies must "obtain a sales tax license for each taxing jurisdiction in which they manage rental properties." What is important to remember is that Colorado has one of the most complicated tax structures in the country. It isn't unusual for one locality to encompass several different taxing jurisdictions, thanks to municipal taxes, county taxes, and the ever-maddening special district taxes.
The DOR provides the following example: a property management company has three properties in Eagle County, one in the metropolitan district, and two in unincorporated Eagle County outside the metropolitan district. Two different sales tax licenses must be obtained: one for the property in the metropolitan district, and another for the two properties outside of the metropolitan district. In other words, only properties in the exact same taxing jurisdiction may share a license.
The tricky part is discerning exactly which taxing jurisdiction is home to the properties, and what rates apply. The most current and applicable tax rates may be found at the DOR under Colorado Sales/Use Tax Rates (DR 1002). Be sure to bring your patience and whatever caffeinated beverage helps you get through your day.
Home rule cities
But wait! Colorado is a home-rule state, and home rule cities "may treat items differently than the State of Colorado." The sales tax rates for "self-collected areas and home-rule jurisdictions" are listed on the Colorado Sales/Use Tax Rates form, along with the phone numbers for those local tax offices. It's worth keeping those numbers handy.
Local marketing district tax
But wait! Colorado also imposes a local marketing district tax "on lodging services leased or rented for less than 30 days." It applies to hotel and motel rooms, condominiums and camp spaces. In some areas (but not all!) it also applies to vacation rental homes, guest ranches, and mobile homes. The Colorado Sales/Use Tax Rates Form is the resource for this tax, too.
County lodging tax
But wait! Certain counties in Colorado also impose a county lodging tax that "is applied specifically to lodging services, such as hotels, motels, condominiums, space rentals, camping facilities and services, auto camps and trailer parks" when they are rented for less than 30 days. Stay for more than 30 days, and the county lodging tax does not apply.
Owning or operating vacation lodging in Colorado may well be a lucrative business, yet in order to stay in business, owners and property management companies must be sure all applicable taxes are collected and remitted in a timely manner.
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